4 things that affect your aircraft financing

Published on November 30th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Factors such as the Age, make and Model will affect your loan

Age is not just a number to financers. The age of your aircraft will determine what type of loan you get. The older it is the harder it will be to finance due to the possible risks it poses. If you are looking to buy a turbine airplane or piston twins, you will have to be aware that this depreciates quickly. This will mean there will be a higher payment in terms of the repayment plans.

It’s advisable that you compare aviation loan quotes to ensure that you get the best deal for your buck, instead of being stuck with a perpetual l nightmare of high interest rates that make it hard to repay the loan. You will also have to ask yourself whether financing an old model with a pricey loan is worthwhile instead of buying a new one altogether.

Are you sure you’re getting the right cover?

Your lender will evaluate whether you are applying for a loan that matches the usage of your aircraft and if you will be able to make repayments. They will look at whether you are using your aircraft for business, personal, or commercial usage. The use will determine what terms come with your loan.

It is also in your best interest to check the features of the loan that you are applying for so that you can know that you have not bitten off more than you can choose. A financial advisor is one way you can seek professional help to help you gauge the right amount of cover. The general rule is that the more you use your aircraft the more it depreciates, therefore you will pay more for cover.

Sugar coating the history of the aircraft

Your lender will request a detailed information for your airplane, and it will work in your favour if you supply a detailed history including its maintenance. This will increase the chance of you securing good terms for your loan.

You can supply photos, a timely maintenance and damage history so that your lender can provide you with adequate cover. Leaving out important details like this is like shooting yourself in the foot. If you realise that your aircraft is costly to maintain then maybe it’s time to jump a sinking ship and apply for a loan that can get you a new one.

The safety of the aircraft

If your aircraft doesn’t have the necessary safety features it will automatically raise a red flag for your lender. If it Is falling apart and not safe it is highly likely that you won’t find a lender who will be willing to finance you. The best thing to do in this situation is to apply for a loan that will help you buy the safety features that are needed or shop for a loan that will help you get a new aircraft that will be in the interest of yours and everyone else’s safety.

A bonus is that you should always read the fine print of any loan you apply for. View the features to see whether they match the type of flyer you are to make sure that its budget friendly. Luckily for you, the internet has aided in decreasing the footwork by offering plenty of comparison sites for your aviation needs.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for commercial loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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