If you will be applying for aviation financing in Florida, it is important to be familiar with the factors which lenders are going to look at when they decide whether to approve your loan. Along with basics involving your finances, these include details involving the aircraft and the loan itself. Let’s look.
1. Your income, credit history, and financial details.
Firstly, whether you are applying for a personal or commercial aviation loan, lenders are going to want to be sure that you are not going to be a risky customer. Therefore, you can expect them to look at your debt-to-income ratio, your credit score and history, and any other factors which could affect your ability to pay back your loan.
2. The aircraft or parts you are interested in financing.
Next, aviation lenders are going to be interested in knowing what type of aircraft or components you plan to use your loan to purchase or repair. Older aircraft are significantly harder to finance that newer aircraft.
The rate at which an airplane depreciates is also a significant factor. Those which depreciate rapidly require shorter loan terms and higher down payments.
Finally, the condition of the engine and avionics are particularly important when you are applying for financing. Avionics are expected to be up-to-date. Being as they depreciate within just several years, that means they must be very current.
3. The minimum amount of the loan you need.
Aviation loan amounts are generally in the range of $50,000 and above. It is possible to get a smaller loan for an aircraft, but usually the terms will be less favorable, and you will pay more in terms of interest. Getting financing for parts of course can entail a significantly smaller loan without those drawbacks.
4. The down payment you can make.
Usually, lenders will expect you to be able to put 15% to 20% down on an aviation loan. If your credit score is high, there is a chance that you could pay as little as 10% down. But you cannot expect to pay less than that. If you specifically want a longer term for your loan, one way to get it is to put down a higher down payment.
5. The condition of the plane or parts.
To some degree, we have already covered this factor. But it bears emphasizing that this is very important when it comes to both approval and loan features.
Be prepared to do more than simply talk about the condition of the aircraft. You will want to provide thorough documentation on the plane’s history, including information on any damage it has been subjected to, as well as what kind of maintenance and repair work it has received.
You should be able to get these documents directly from the seller. If for whatever reason you cannot, you may want to think about buying a different aircraft instead. A lender would rightly consider the purchase of risky one, and you should as well.
6. How you will use the aircraft or components.
Finally, the way in which you will use the plane or parts that you wish to purchase is also relevant to your lender. It’s important to be aware that commercial aircraft depreciate much faster than those which are just for personal use. That is going to have an impact on your loan term. Airplanes purchased for a flight school will depreciate especially rapidly since the students who are using them may subject them to more hard use than experienced pilots would.
If you need help applying for aviation financing in Miami for commercial aircraft, commercial aircraft engines, helicopters, parts and more, Lending Bankers Mortgage can help you apply for a loan with a term and interest rate which fit your needs. Please give us a call at (786) 220-1100.