Glider Financing

[noel.wade]

Called AOPA last Thursday - and nope, none of their financing partners can do gliders at present. They claim that if more people start requesting it, they may be able to make it happen; but not immediately.

Sad, really - and IMHO one more reason the sport isn't growing here. A person looking for a hobby can finance a boat, an RV, a snowmobile, a motorcycle, or an airplane on MUCH friendlier terms than a glider. So that limits the pool of private owners to fanatics like me or older folks who've had time to build up a lot of home equity or other large financial resources.

And this doesn't just impact buyers. It also makes it harder for every one out there that has a sailplane and hopes to sell it someday.

--Noel

[waremark]

In the UK it is normal for gliders to be shared between syndicates of 2 or 3 members. A syndicate of less prosperous members might buy an older glider for 8,000 dollars, and for a third of that a syndicate member can have as much fun flying as a prosperous pilot who invests 400,000 dollars in the latest supership. So pilots invest whatever they can afford. I have not heard any private owners talk about taking finance on a glider.

[son_of_flubber]

On Monday, June 10, 2013 3:35:27 AM UTC-4, waremark wrote:
> In the UK ... I have not heard any private owners talk about taking finance on a glider.

I believe that that is true for many cases in the USA, but the younger cohort that is in line to buy used gliders from the baby boomers, is not so affluent. The baby boomers are hoping that the new buyers will finance their purchases, otherwise there will be a shortage of buyers and a radical drop in prices.

The good news is that folks will probably be able to buy a well maintained 1:40 glider for $10,000 10 years from now. Wearable avionics should drop in price as well.

[[email protected]]

With financing you'd still have to be a fanatic to make mortgage sized payments on a low utility fringe toy.
On Sunday, June 9, 2013 6:08:27 PM UTC-4, noel.wade wrote:
> Called AOPA last Thursday - and nope, none of their financing partners can do gliders at present. They claim that if more people start requesting it, they may be able to make it happen; but not immediately.
>
>
>
> Sad, really - and IMHO one more reason the sport isn't growing here. A person looking for a hobby can finance a boat, an RV, a snowmobile, a motorcycle, or an airplane on MUCH friendlier terms than a glider. So that limits the pool of private owners to fanatics like me or older folks who've had time to build up a lot of home equity or other large financial resources.
>
>
>
> And this doesn't just impact buyers. It also makes it harder for every one out there that has a sailplane and hopes to sell it someday.
>
>
>
> --Noel

[Dan Marotta]

I owned *TWO* LS-6s in separate partnerships. In both cases it worked out
well. Just be sure you know and respect the person you join up with and
have a complete understanding of expectations. Those partnerships got me
650 hours in a ship I could not afford by myself at the time.

Dan

> wrote in message
...
With financing you'd still have to be a fanatic to make mortgage sized
payments on a low utility fringe toy.
On Sunday, June 9, 2013 6:08:27 PM UTC-4, noel.wade wrote:
> Called AOPA last Thursday - and nope, none of their financing partners can
> do gliders at present. They claim that if more people start requesting it,
> they may be able to make it happen; but not immediately.
>
>
>
> Sad, really - and IMHO one more reason the sport isn't growing here. A
> person looking for a hobby can finance a boat, an RV, a snowmobile, a
> motorcycle, or an airplane on MUCH friendlier terms than a glider. So that
> limits the pool of private owners to fanatics like me or older folks
> who've had time to build up a lot of home equity or other large financial
> resources.
>
>
>
> And this doesn't just impact buyers. It also makes it harder for every one
> out there that has a sailplane and hopes to sell it someday.
>
>
>
> --Noel

[[email protected]]

The best way to borrow money to finance a glider is to take out a home equity loan or refinance your mortgage -- a good idea anyway as unbelievably low interest rates can't last forever.

John Cochrane

[Clay[_4_]]

On Monday, June 10, 2013 11:30:49 AM UTC-4, wrote:
> The best way to borrow money to finance a glider is to take out a home equity loan or refinance your mortgage -- a good idea anyway as unbelievably low interest rates can't last forever.
>
>
>
> John Cochrane

Yes, but the spouse would have to co-sign I believe, putting their equity at some risk (minimal I know). That conversation would be interesting (and quite loud), to put it mildly, in my household.

[noel.wade]

On Jun 10, 8:30*am, wrote:
> The best way to borrow money to finance a glider is to take out a home equity loan or refinance your mortgage -- a good idea anyway as unbelievably low interest rates can't last forever.
>
> John Cochrane

John -

This is true; but again you're limiting your potential buyers to
homeowners who ALSO happen to have a good amount of equity. That
right there is tough enough, in the wake of the financial crisis/
housing-market implosion (even if you bought near the bottom, as I
did). Furthermore, home loans are tougher now. Equity is typically
capped at 80% of property value, and then your mortgage amount is
deducted from that.
Example time:
-----
$30,000 glider at 80% financing means you need to get a loan of about
$27000 ($24k + a few for fees, taxes, and escrow).
Let's also say you bought a $300,000 house for 10% down (5% - 15% is
fairly common these days, given that its hard for people to save
$60,000+ for their first home).
Since your home-equity is capped at 80% of $300,000 (i.e. $240,000)
you need your mortgage balance to be $213,000 in order to have enough
useable equity.
On a 30-year 3.75% fixed-interest mortgage, you have to be in month
117 to have paid off that much.
That's _9.75 YEARS_
-----
So, before someone can get a loan to buy their first $30,000 glider
(LS-4, DG-300, ASW-19/20, etc) they have to buy a home and make
payments for ~10 years. Again, I state: That's ridiculous, in terms of
the portion of the US population that you've excluded.

I don't want to sound harsh, but perhaps those of you in your 50's and
60's in this sport need to look around at the economics of the times
(OK, everyone but John Chochrane; since that's his day-job)... With
wage-growth (or lack thereof) and home-prices being pumped back up to
higher levels, this is not a reasonable path to glider ownership for
_most_ people in their 20's or 30's. You're cutting out a huge portion
of the demographic - many of whom are having fewer kids and waiting
longer to get married (and thus _could_ participate actively in the
sport even at that age, if they could obtain decent financing to
spread the acquisition costs out).

YES, you can do syndicates or partnerships. But imagine what the
Boat, ATV, Motorcycle, or RV markets would look like if that was the
main path to ownership for those items? Or heck, even the propeller-
airplane market?

I've been continuing to raise this publicly because I was half-
expecting someone to stand up and tell me I'm dumb and this subject
has already been resolved, and I was just unaware of the resolution. I
mean, if this situation existed in the powered-airplane world, the
AOPA and EAA (and airplane manufacturers) would've resolved with
gusto. It just seems like an obvious situation/problem that the glider
community would be interested in improving (especially for everyone
who owns a glider and wants to be able to sell it someday).

--Noel

[[email protected]]

>
> --Noel

Noel: No disagreement, actually. A glider is durable and fairly easy to sell, so we should be able to borrow to finance them at reasonably low rates. (For those who don't have home equity or other resources.) I presume it's just so small a market that nobody other than Lea County Bank has developed the expertise.

Maybe you should start a pilot's credit union, or similar business supplying glider loans? There are also a lot of wealthy glider pilots who understand a glider is good collateral and might want to earn more than the pitiful returns offered by bond markets these days.

The glider-backed security, latest wall street fad... Seriously now.

John Cochrane

[noel.wade]

On Jun 11, 7:41*am, wrote:
> > --Noel
>
> Noel: No disagreement, actually. A glider is durable and fairly easy to sell, so we should be able to borrow to finance them at reasonably low rates.. (For those who don't have home equity or other resources.) I presume it's just so small a market that nobody other than Lea County Bank has developed the expertise.

I know I'm verging on beating a dead horse here; but what I find
fascinating (and frustrating) is that the "expertise" is _no_
different than most other aircraft loans... So there should be
_several_ companies that have the necessary expertise (its not like
Escrow or Title Searches or FAA Forms are different when its a
glider)! Its just weird...

--Noel

[son_of_flubber]

On Tuesday, June 11, 2013 11:31:25 AM UTC-4, noel.wade wrote:
> Its just weird...

My uncle who flew "the hump" in WWII: "Why would you take the engine out of a perfectly good airplane?"

A lot of people think that gliders are "wierd".

[Ramy]

Many credit cards offers zero percent interest for 1 year. You can finance your glider using credit cards and transfer the balance to another credit card when the introduction rate expires. That's how I paid for my first glider , with zero percent credit cards and low monthly payments. This requires discipline, and good credit rating.

Ramy

[noel.wade]

On Jun 11, 9:37*am, Ramy > wrote:
> Many credit cards offers zero percent interest for 1 year. You can finance your glider using credit cards and transfer the balance to another credit card when the introduction rate expires. That's how I paid for my first glider , with zero percent credit cards and low monthly payments. This requires discipline, and good credit rating.
>
> Ramy

....And a credit card with a limit of $20k - $40k. Again, this is a
possible solution but _not_ one that the general public can take
advantage of!

--Noel