Anyone know why US Banks & Aircraft Finance companies are so averse to
glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on
the floor of my garage) financed through NAFCO or others... But when
researching loans for my next sailplane they all say "sorry, no can
do" as soon as they find out the aircraft doesn't have an engine!

Anyone have thoughts, or finance companies they'd recommend?

NOTE: I've contacted Lea County State Bank twice. Both times the "SSA-
glider-loan-guy" has been out of the office, and the terms their other
staff have quoted me haven't been all that impressive... 6% - 10% for
5-7 years is not much better than what I can do with a Personal
Unsecured Loan at any reasonable bank. Most collateralized aircraft
loans (even for small experimental kits) are on 7 - 15 year terms and
4% - 9%!

*sigh*

--Noel

I should add that this is not just a rant because I'm personally
affected. It has larger implications for US Soaring:

How do we expect new folks to get into the sport if they cannot find
reasonable paths to sailplane ownership?

Additionally, how do we expect clubs (or small partnerships) to
acquire aircraft or make capital/fleet improvements, if they cannot
find reasonable financing? Sure, they could do a business loan if
they're a large-enough entity; but collateralized/secured loans are
far more affordable than unsecured loans, and a far better way to
handle asset acquisition. There's a reason why most people do car
loans and mortgages, instead of unsecured loans or cash payments for
these large assets!

--Noel

On Thursday, June 6, 2013 2:44:00 PM UTC-6, noel.wade wrote:
> I should add that this is not just a rant because I'm personally
>
> affected. It has larger implications for US Soaring:
>
>
>
> How do we expect new folks to get into the sport if they cannot find
>
> reasonable paths to sailplane ownership?
>
>
>
> Additionally, how do we expect clubs (or small partnerships) to
>
> acquire aircraft or make capital/fleet improvements, if they cannot
>
> find reasonable financing? Sure, they could do a business loan if
>
> they're a large-enough entity; but collateralized/secured loans are
>
> far more affordable than unsecured loans, and a far better way to
>
> handle asset acquisition. There's a reason why most people do car
>
> loans and mortgages, instead of unsecured loans or cash payments for
>
> these large assets!
>
>
>
> --Noel

Try Lea County Bank in Hobbs, NM.
https://www.onlinelcsb.com/asp/products/product_3_5.asp
They've been financing gliders for 50 years with, they say, not one default. They're eager for your business.

On Thursday, June 6, 2013 4:44:00 PM UTC-4, noel.wade wrote:

> Additionally, how do we expect clubs (or small partnerships) to
> acquire aircraft or make capital/fleet improvements, if they cannot
> find reasonable financing?

A club that I know first hand recently placed notes (loans) with multiple members for $3000 each at 4% to finance a new glider. Club members can be counted on to be a lot more flexible about repayment than any bank would be should income fall below projections. Given current CD rates, members are pretty happy to get 4% on the note. This club has realistic dues and rental fees and therefore a good historical cash flow, so I feel quite secure holding a note (and I get XC coaching in a new two place glider).

The mistake that I've seen two other clubs make is that they set dues and glider rental fees unrealistically low, so there is no positive cash flow. Since the club gliders are deteriorating, these clubs are in a slow death spiral. If they set the rental fee for the SGS 2-33 at $20 a flight, they would have a positive cash flow. If students canceled their cable TV bill, they could easily afford $70 a flight compared to the current $55. If the CFI-Gs would embrace Condor, fewer tows would be needed, more students could be accommodated, and the total cost of learning to fly a glider work about to be about the same as the current low and unrealistic rental fee system.

On Jun 6, 1:32*pm, "noel.wade" > wrote:

> Anyone know why US Banks & Aircraft Finance companies are so averse to
> glider loans?

What's a glider loan?

At 21:37 06 June 2013, Bob Kuykendall wrote:
>On Jun 6, 1:32=A0pm, "noel.wade" wrote:
>
>> Anyone know why US Banks & Aircraft Finance companies are
so averse to
>> glider loans?
>
>What's a glider loan?
>
Noel, Call Robert Floyd over at Lea County. He doesnt know your
looking for a loan. his cell is 575-397-6609. He braggs that a glider
guy has never defaulted. He says its easy money.
Good luck, Doug

On 6/6/2013 3:27 PM, Doug Mueller wrote:
> At 21:37 06 June 2013, Bob Kuykendall wrote:
>> On Jun 6, 1:32=A0pm, "noel.wade" wrote:
>>
>>> Anyone know why US Banks & Aircraft Finance companies are
> so averse to
>>> glider loans?
>>
>> What's a glider loan?
>>
> Noel, Call Robert Floyd over at Lea County. He doesnt know your
> looking for a loan. his cell is 575-397-6609. He braggs that a glider
> guy has never defaulted. He says its easy money.

Easy money for him, for sure, if he is charging 6% to 10% (see Noel's
post above), and if there is no chance of default.

> Good luck, Doug
>

"No can do" and "can do with a Personal Unsecured Loan at any reasonable bank" are contradictory statements. Is it you can't get a loan, or you just don't like the interest rate on offer?

I understand loan rates at LCB vary according to the type of glider. 2-seat trainers bought by clubs may qualify for lower interest rates.



On Thursday, June 6, 2013 2:32:59 PM UTC-6, noel.wade wrote:
> Anyone know why US Banks & Aircraft Finance companies are so averse to
>
> glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on
>
> the floor of my garage) financed through NAFCO or others... But when
>
> researching loans for my next sailplane they all say "sorry, no can
>
> do" as soon as they find out the aircraft doesn't have an engine!
>
>
>
> Anyone have thoughts, or finance companies they'd recommend?
>
>
>
> NOTE: I've contacted Lea County State Bank twice. Both times the "SSA-
>
> glider-loan-guy" has been out of the office, and the terms their other
>
> staff have quoted me haven't been all that impressive... 6% - 10% for
>
> 5-7 years is not much better than what I can do with a Personal
>
> Unsecured Loan at any reasonable bank. Most collateralized aircraft
>
> loans (even for small experimental kits) are on 7 - 15 year terms and
>
> 4% - 9%!
>
>
>
> *sigh*
>
>
>
> --Noel

On Thursday, June 6, 2013 4:32:59 PM UTC-4, noel.wade wrote:
> Anyone know why US Banks & Aircraft Finance companies are so averse to glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on the floor of my garage) financed through NAFCO or others... But when researching loans for my next sailplane they all say "sorry, no can do" as soon as they find out the aircraft doesn't have an engine! Anyone have thoughts, or finance companies they'd recommend? NOTE: I've contacted Lea County State Bank twice. Both times the "SSA- glider-loan-guy" has been out of the office, and the terms their other staff have quoted me haven't been all that impressive... 6% - 10% for 5-7 years is not much better than what I can do with a Personal Unsecured Loan at any reasonable bank. Most collateralized aircraft loans (even for small experimental kits) are on 7 - 15 year terms and 4% - 9%! *sigh* --Noel

Your local bank that has "low" interest loans on cars can do so because they understand exactly what their risk is and how they will recover if the loan goes bad.
Since they don't know anything about what is securing the loan, they don't want the business.
Can't say that I blame them.
My old aircraft banker used to say gliders were his best loans because nobody ever walked away from them.
FWIW
UH

On 6/6/2013 4:33 PM, wrote:
> On Thursday, June 6, 2013 4:32:59 PM UTC-4, noel.wade wrote:
>> Anyone know why US Banks & Aircraft Finance companies are so averse to glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on the floor of my garage) financed through NAFCO or others... But when researching loans for my next sailplane they all say "sorry, no can do" as soon as they find out the aircraft doesn't have an engine! Anyone have thoughts, or finance companies they'd recommend? NOTE: I've contacted Lea County State Bank twice. Both times the "SSA- glider-loan-guy" has been out of the office, and the terms their other staff have quoted me haven't been all that impressive... 6% - 10% for 5-7 years is not much better than what I can do with a Personal Unsecured Loan at any reasonable bank. Most collateralized aircraft loans (even for small experimental kits) are on 7 - 15 year terms and 4% - 9%! *sigh* --Noel
>
> Your local bank that has "low" interest loans on cars can do so because they understand exactly what their risk is and how they will recover if the loan goes bad.
> Since they don't know anything about what is securing the loan, they don't want the business.
> Can't say that I blame them.
> My old aircraft banker used to say gliders were his best loans because nobody ever walked away from them.

So the bank understands its risk is zero. That should lead to a low
interest rate. Right?

> FWIW
> UH
>

On Jun 6, 4:14*pm, Bill D > wrote:
> "No can do" and "can do with a Personal Unsecured Loan at any reasonable bank" are contradictory statements. *Is it you can't get a loan, or you just don't like the interest rate on offer?

Bill - The issue is that aircraft-specific financing companies say "no
can do" when they discover the aircraft is a sailplane, not a
propeller-driven airplane. I can get loans for propeller-driven
aircraft all day long... I find it incredibly odd that they flatly
refuse to deal in sailplanes - but will happily finance prop-planes,
helicopters, and aircraft kits. They're willing to finance more-
complicated, higher-maintenance, more-costly-to-own assets that don't
necessarily have the same proven value-retention that Sailplanes do.
As for Personal Unsecured Loans: They are a different animal entirely
- its not _just_ a matter of interest rates. You're not putting up
any collateral, so you've got higher interest-rates _and_ shorter
terms. These combine to make monthly payments cost-prohibitive or
impractical. Aircraft finance companies will happily do 7-20 _year_
terms for a prop-plane; and at an interest rate that is 25% to 75%
_lower_ than a personal unsecured loan (which most banks cap at a 5
year term). Why is it that they won't do the same for a sailplane?

Let me put this another way: The reason people can afford homes is
because you take out a mortgage. The bank believes in the long-term
value of your collateral (your home) and thus is willing to do a very
long-term, low-interest-rate loan against it. Could you imagine trying
to buy a home on a 5-year loan term, at 10% interest? Its just not
practical for that size of asset. Aircraft finance companies treat
airplanes in a similar manner to the way banks treat homes. But they
_don't_ treat sailplanes in the same manner they treat airplanes.

For those recommending LCB (aka LCSB) - please see my NOTE in my
original post. I have been told that he is out of the office until
Monday. I'm not gonna call the guy's cell phone while he's on vacation
or out for personal reasons - I'll call on Monday and confirm my
options - but the staff's comments so far make me think its not going
to be super-appealing. And if the other bank staff are quoting me
improper interest rates or term lengths, then that's a problem they
need to address.

Finally: Even if LCSB _does_ offer glider loans that are comparable to
the aircraft loans we can get for prop-planes, I still find it
disturbing/sad that they are the sole major provider. Competition
would encourage better pricing (i.e. loan terms) and more choices for
consumers. If the business really is that good/profitable for them,
why aren't there at least a few other financing companies out there
who are willing to make "easy money"? Its not a volume business to be
sure, but neither is aircraft financing in general; and easy money is
easy money.

--Noel

On Jun 6, 2:21*pm, son_of_flubber > wrote:
>
> A club that I know first hand recently placed notes (loans) with multiple members for $3000 each at 4% to finance a new glider.

Sure, this works if your club is healthy and of a certain size, and is
looking for sailplanes within a certain range of prices.

But how many $3000 loans do you need to get, to afford a new (or
slightly-used) 2-seat trainer?
How long are those loan-terms? My guess is that they're on a 10-year
time-scale (or more)...

Your method is a viable option for some; but my point is that the
market already has other solutions for powered aircraft. Why aren't
those solutions available for sailplanes?

This is both a rhetorical question I'm shouting into the ether, and a
real question (I'm curious if any of the sages here on RAS can point
to something that happened in the past, or something obvious I'm
overlooking).

--Noel
P.S. Called AOPA Aircraft Finance. They also expressed puzzlement
about the lack of sailplane financing options - and since they act as
a broker they had to state that they couldn't help me because none of
their partners/vendors do glider loans. They _did_ say that if more
people called and asked, it would give AOPA some info to take to
lenders to try to get the market opened up. *shrug*

On Jun 6, 4:33*pm, wrote:

> Since they don't know anything about what is securing the loan, they don't want the business.
> Can't say that I blame them.

Right, UH. I understand _normal_ consumer banks not understanding the
business - its a specialty thing done at a low volume. But that
doesn't answer the question why Aircraft Finance companies don't do
it. I mean, shouldn't _they_ understand the aircraft world? How is an
aircraft kit (a damn pile of aluminum parts that'd resell for 1/10th
the purchase price) "better collateral" or a "safer bet" for these
finance companies than a glider loan? It just bewilders me...

--Noel
(who senses a business opportunity; but doesn't have the cash reserves
to become a lender)
*chuckle*

On Thursday, June 6, 2013 5:46:47 PM UTC-6, noel.wade wrote:
> On Jun 6, 4:14*pm, Bill D > wrote:
>
> > "No can do" and "can do with a Personal Unsecured Loan at any reasonable bank" are contradictory statements. *Is it you can't get a loan, or you just don't like the interest rate on offer?
>
>
>
> Bill - The issue is that aircraft-specific financing companies say "no
>
> can do" when they discover the aircraft is a sailplane, not a
>
> propeller-driven airplane. I can get loans for propeller-driven
>
> aircraft all day long... I find it incredibly odd that they flatly
>
> refuse to deal in sailplanes - but will happily finance prop-planes,
>
> helicopters, and aircraft kits. They're willing to finance more-
>
> complicated, higher-maintenance, more-costly-to-own assets that don't
>
> necessarily have the same proven value-retention that Sailplanes do.
>

It's education. The SSA undertook to educate LCSB about the value of making sailplane loans. We all need to do the same with the banks who do airplane lending. Ask a loan officer to call LCSB and discuss the business.

On Thursday, June 6, 2013 2:32:59 PM UTC-6, noel.wade wrote:

> Anyone have thoughts, or finance companies they'd recommend?
>
I looked at LCSB and they were not even close to being competitive. Check with some of the local credit unions. Mine actually will finance a sailplane but I was in a position to do a home equity at a better rate with deductible interest. Shop around and good luck.

Go local! I went to the bank I and my company does business with and received a 3.75% rate on a 5 year note with 20% down. I asked if they would be interested in more glider nationally loans they said that they were a local bank and are only interested in local loans.

Noel shoot me an email. Jordan(dot)E(dot)Pollock at gmail dot com.

E