Is there an easy way to buy an aircraft?

[Jim]

I am a curently a comericial student that is looking to buy a light
single to build time in and for the short family flights. I am having a
problem finding financing due to a lack of a large down payment (due to
school cost). Is there an easy way to buy or am I just S.O.L. untill I
get the down payment???? Please help.... Thank You

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[Ben Jackson]

In article >,
Jim > wrote:
>I am a curently a comericial student that is looking to buy a light
>single to build time in and for the short family flights. I am having a
>problem finding financing due to a lack of a large down payment (due to
>school cost). Is there an easy way to buy or am I just S.O.L. untill I
>get the down payment???? Please help.... Thank You

It's not difficult to buy an airplane (easier than selling I bet!). It
can be tricky to find the right one to buy.

If you mean "easy" as in "cheap", well, if you can't afford a 20% down
payment there's no way you can afford to own an airplane. A 152 is
$20-25k. At any moment something could go wrong to cost $4000 (ie
down-payment-sized) in maintenance.

I'll probably catch some flak for this, but I think if you buy a light
airplane you should be *able* to buy it for cash, and then you should
get a loan because the cost of money is so low right now. If you get
a loan because you *need* it (on anything other than brand new) you're
not going to be able to fly and maintain it.

--
Ben Jackson
>
http://www.ben.com/

[Sven]

"Ben Jackson" > wrote in message
news:jMbKb.754827$Fm2.700654@attbi_s04...
> In article >,
> Jim > wrote:
> >I am a curently a comericial student that is looking to buy a light
> >single to build time in and for the short family flights. I am having a
> >problem finding financing due to a lack of a large down payment (due to
> >school cost). Is there an easy way to buy or am I just S.O.L. untill I
> >get the down payment???? Please help.... Thank You
>
> It's not difficult to buy an airplane (easier than selling I bet!). It
> can be tricky to find the right one to buy.
>
> If you mean "easy" as in "cheap", well, if you can't afford a 20% down
> payment there's no way you can afford to own an airplane. A 152 is
> $20-25k. At any moment something could go wrong to cost $4000 (ie
> down-payment-sized) in maintenance.
>
> I'll probably catch some flak for this, but I think if you buy a light
> airplane you should be *able* to buy it for cash, and then you should
> get a loan because the cost of money is so low right now. If you get
> a loan because you *need* it (on anything other than brand new) you're
> not going to be able to fly and maintain it.

I agree with Ben. I purchased my plane when I had the cash available and
some extra for repairs, reserve, etc. I am finally in a financial situation
that I will pay cash for any vehicle or any other purchase. If I can't
afford to pay cash, I won't buy it until I can.

[Mike Rapoport]

If you can't afford to buy it, how are you going to afford to fly it?

Mike
MU-2


"Jim" > wrote in message
...
> I am a curently a comericial student that is looking to buy a light
> single to build time in and for the short family flights. I am having a
> problem finding financing due to a lack of a large down payment (due to
> school cost). Is there an easy way to buy or am I just S.O.L. untill I
> get the down payment???? Please help.... Thank You
>
> *** Sent via http://www.automationtools.com ***
> Add a newsgroup interface to your website today.

[TripFarmer]

Partnership with one or two people. Sharing the costs is nice and you, nor
they, can fly every day.


Trip

In article >,
says...
>
>I am a curently a comericial student that is looking to buy a light
>single to build time in and for the short family flights. I am having a
>problem finding financing due to a lack of a large down payment (due to
>school cost). Is there an easy way to buy or am I just S.O.L. untill I
>get the down payment???? Please help.... Thank You
>
>*** Sent via http://www.automationtools.com ***
>Add a newsgroup interface to your website today.

[PaulH]

Ben Jackson is right on target. If you purchase an inexpensive
airplane, it will be an old one. I've discovered owning a 69 Arrow
that even with a low time airframe there is a constant flow of things
that have to be fixed.

[Jay Honeck]

> I'll probably catch some flak for this, but I think if you buy a light
> airplane you should be *able* to buy it for cash, and then you should
> get a loan because the cost of money is so low right now. If you get
> a loan because you *need* it (on anything other than brand new) you're
> not going to be able to fly and maintain it.

I agree. If you can't afford to buy it in cash, you're courting trouble
when the inevitable "oh, ****" repair happens.

Actually, the best possible scenario is one in which you personally loan
your company the money to buy the plane.
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"

[Newps]

Jay Honeck wrote:
>>I'll probably catch some flak for this, but I think if you buy a light
>>airplane you should be *able* to buy it for cash, and then you should
>>get a loan because the cost of money is so low right now. If you get
>>a loan because you *need* it (on anything other than brand new) you're
>>not going to be able to fly and maintain it.
>
>
> I agree. If you can't afford to buy it in cash, you're courting trouble
> when the inevitable "oh, ****" repair happens.

I disagree. I borrowed because the money was cheap and also because it
is home equity, therefore deductible. I will not be grounded because of
money.

[Colin Kingsbury]

"Sven" > wrote in message
news:BteKb.740641$HS4.5672719@attbi_s01...
> I agree with Ben. I purchased my plane when I had the cash available and
> some extra for repairs, reserve, etc. I am finally in a financial
situation
> that I will pay cash for any vehicle or any other purchase. If I can't
> afford to pay cash, I won't buy it until I can.

Well I disagree. I look at interest as an insurance payment for keeping my
cash liquid in the bank rather than tied up in an asset. A
slowly-depreciating asset like an airplane or a car is a totally reasonable
thing to finance. If you want to be more conservative you can say you want
to make sure you never owe more than the asset is worth at wholesale value
(what car dealers call being upside-down) but the point is similar.

If you want to look at where people really get into trouble, the first place
is when their free cash flow becomes insufficient. You avoid this by not
buying more crap than you can afford to. But if you screw up here, you can
still come out OK if your assets are worth more than your debt, and you can
buy your way out. When you can't do that, then you're pretty well snookered
and you won't have any credit lines to worry about for quite some time. My
personal rule is to not finance anything worth less than $2000, because I
tend to think pretty seriously before spending that kind of money.

Best,
-cwk.

[G.R. Patterson III]

Jay Honeck wrote:
>
> I agree. If you can't afford to buy it in cash, you're courting trouble
> when the inevitable "oh, ****" repair happens.

I disagree. In fact, the only time you're courting trouble is if you use up most
of your ready cash buying the plane. Whether you take out a loan or not, it's
important to have a few thousand available for repairs. The more expensive the
plane is, the more you should keep back for emergencies. My rule of thumb is that
10% of the aircraft value should be a sufficient emergency fund.

George Patterson
Great discoveries are not announced with "Eureka!". What's usually said is
"Hummmmm... That's interesting...."

[Ron Natalie]

"Colin Kingsbury" > wrote in message news:M_CKb.28510
> Well I disagree. I look at interest as an insurance payment for keeping my
> cash liquid in the bank rather than tied up in an asset. A
> slowly-depreciating asset like an airplane or a car is a totally reasonable
> thing to finance.

My airplane is not depreciating at all. A (new) car has a rather rapid
depreciation. There are a lot of people out there that never get
positive equity in a car.

[John Smith]

I agree with TripFarmer, partnership is the way to go. Personally, I
purchased a 1/5th share before I even started my flight training, and it
turned out great. My cost for the share was $8000, and my hourly cost is
roughly $50 on a '64 cherokee. This is not including the yearly annual,
insurance or any repairs, which incidentally is split 5 ways, but still!
Therefore, my advice is:
1. Look in the used market
2. Either start a partnership with a bunch of pilots looking to own a
plane at your airport, or look to buy out someones' share.

I also agree somewhat with some of the other posts. Flying is an expensive
activity, and you will need quite a bit of cash to get to commercial
standards; even if you own a plane (old or new). So you would be wise to
have some money set aside for emergencies and repairs.

I hope this helps.

Keep flying
JS

"TripFarmer" > wrote in message
...
> Partnership with one or two people. Sharing the costs is nice and you,
nor
> they, can fly every day.
>
>
> Trip
>
> In article >,
> says...
> >
> >I am a curently a comericial student that is looking to buy a light
> >single to build time in and for the short family flights. I am having a
> >problem finding financing due to a lack of a large down payment (due to
> >school cost). Is there an easy way to buy or am I just S.O.L. untill I
> >get the down payment???? Please help.... Thank You
> >
> >*** Sent via http://www.automationtools.com ***
> >Add a newsgroup interface to your website today.
>




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[Colin Kingsbury]

"Ron Natalie" > wrote in message
m...
>
> My airplane is not depreciating at all.

If you factor in ownership costs I doubt anyone ever makes money owning a
plane. On the other hand quite a few people use the plane for many years and
sell it for close to what they paid for it, perhaps even coming out a little
ahead. In this regard they are vastly superior to boats or sports cars which
easily depreciate in the teens.

> A (new) car has a rather rapid
> depreciation.

A new anything has rapid depreciation. There is a huge difference in the
market between "brand new" and "1 day old." It can easily be larger than the
difference between 3 and 4 years old.

> There are a lot of people out there that never get
> positive equity in a car.

The first few years everything is against you- rapid depreciation times
compound interest pretty much buries you. But if you buy a car that has good
resale value on a 5-year loan, the lines should start to cross after 3 years
or so. Of course if you buy a Ford/GM/Chevy and the manufacturers are
offering 0% financing and gazillion-dollar rebates then you're going to be
SOL for a while.

Where most people screw up is they buy a cheap car that depreciates fast and
feels and looks old after 2-3 years, then they go out and get a new one. If
you buy a nice car up front, it won't only hold its value longer, you won't
feel so pressed to dump it.

-cwk.

-cwk.

[Ron Natalie]

"Colin Kingsbury" > wrote in message hlink.net...
>
> "Ron Natalie" > wrote in message
> m...
> >
> > My airplane is not depreciating at all.
>
> If you factor in ownership costs I doubt anyone ever makes money owning a
> plane.

I never said it was making money... appreciation/depreciation is a capital
issue.


> The first few years everything is against you- rapid depreciation times
> compound interest pretty much buries you.

You better stop dealing with the loan sharks. I've never had a compound
interest car loan.

[Paul Sengupta]

If you get a 3 year loan, the lines definitely should cross after 3 years...

If they don't you've bought a bit of a loser.

Paul

"Colin Kingsbury" > wrote in message
hlink.net...
> But if you buy a car that has good
> resale value on a 5-year loan, the lines should start to cross after 3
years
> or so.

[Ron Natalie]

"Colin Kingsbury" > wrote in message news:CeHKb.28861]'

> But if you buy a car that has good
> resale value on a 5-year loan, the lines should start to cross after 3 years
> or so.

Correct, and many people trade up before they reach that point. Consider also
the leases and the GM so-called "Smart Loan". Essentially these things have
balloons that approximate the value of the car at the end of the term.

> Of course if you buy a Ford/GM/Chevy and the manufacturers are
> offering 0% financing and gazillion-dollar rebates then you're going to be
> SOL for a while

??? A lower interest rate, or a decreased acquisition cost is going to help,
not hinder.

[Jay Honeck]

> > I agree. If you can't afford to buy it in cash, you're courting trouble
> > when the inevitable "oh, ****" repair happens.
>
> I disagree. I borrowed because the money was cheap and also because it
> is home equity, therefore deductible. I will not be grounded because of
> money.

Please note: I did not say "Don't take a loan". I said "if you can't afford
to buy it with cash, you're courting trouble".

I took out a loan AND I could afford to buy it with cash, for the precise
reasons you (and others) stated.
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"
"Newps" > wrote in message
news:K3AKb.300117$_M.1713611@attbi_s54...
>
>
> Jay Honeck wrote:
> >>I'll probably catch some flak for this, but I think if you buy a light
> >>airplane you should be *able* to buy it for cash, and then you should
> >>get a loan because the cost of money is so low right now. If you get
> >>a loan because you *need* it (on anything other than brand new) you're
> >>not going to be able to fly and maintain it.
> >
> >
>

[Colin Kingsbury]

"Ron Natalie" > wrote in message
m...
>
> "Colin Kingsbury" > wrote in message
news:CeHKb.28861]'
>
> > Of course if you buy a Ford/GM/Chevy and the manufacturers are
> > offering 0% financing and gazillion-dollar rebates then you're going to
be
> > SOL for a while
>
> ??? A lower interest rate, or a decreased acquisition cost is going to
help,
> not hinder.

It helps you when you're buying a car but it hurts you when you're trading
it in. When I bought my Jeep in 1/2001 the dealers were selling for $300
over invoice (including "marketing fees" and all that other crap) with a
3/36 warranty and financing at 7.9%. Two years later the same guys were
offering them for invoice or less with a 7/70 warranty and 0% financing. If
you figure that the term of a used car loan is (should be) shorter (say 2-3
years versus 5) than for a new car and that used car loans have higher
rates, you get a situation where buying a new car costs only a little more
than a used one.

Used car values have a lot to do with the cost of buying the equivalent car
new. This is causing some trouble with companies that wrote 2-3 year leases
on cars sold 1999-2001 that have, in today's market, very high residuals. I
had one dealer with a ridiculously high (15-20% high ) asking price tell me,
"Well, that's what we had to pay to close out the lease, so that's what we
need to sell it for." Then I told him, "Well OK then, this is what I owe on
my loan, so I'm not selling for any less than that, " and he said "No one
will ever give you that." Talk about cognitive dissonance. Playing mind
games with stupid people is one of my guilty pleasures.

-cwk.

-cwk.

[Ben Jackson]

In article .net>,
Colin Kingsbury > wrote:
>"Well, that's what we had to pay to close out the lease, so that's what we
>need to sell it for." Then I told him, "Well OK then, this is what I owe on
>my loan, so I'm not selling for any less than that, " and he said "No one
>will ever give you that." Talk about cognitive dissonance. Playing mind
>games with stupid people is one of my guilty pleasures.

I bought a relatively inexpensive car for cash a few years ago, with a
trade-in that I figured was worth about nothing (I traded it in so they'd
have to deal with it -- it wasn't worth making it pass DEQ). The sales
drone refused to work in units of 'price', instead wanting to talk in
terms of monthly payments taking into account the trade-in value. When
he tried to bait'n'switch me AND give me 'final offer' pressure all at
once I immediately realized he wasn't asking enough and accepted. You
could have knocked him over with a feather, since I'd been pretty
obstinate up to that point.

The sales manager really treated me like crap after that, miffed that
he couldn't screw me on the trade-in AND there was no loan revenue AND
he'd sold a new car model off someone else's lot for a few hundred over
invoice.

--
Ben Jackson
>
http://www.ben.com/