Aircraft Financing

[[email protected]]

I'm debating the purchase of a plane and I was wondering what the
current rates are that anyone has gotten for financing on an aircraft
for a loan amount of $50-60K for either a 5, 7, or 10 year term. I know
that AOPA can quote this, and I'll be calling them tomorrow during
business hours. However I wanted to see what other people had found by
shopping around.

Thanks,
Eric

[Robert M. Gary]

Its amazing to me that some people finance their personal aircraft. The
monthly costs associated with owning an aircraft are so massive I can't
imaging servicing a loan on top of that.

-Robert, M20F

[[email protected]]

Normally I'd agree, but in the short term it may make sense to finance
1/2 and then pay it off early at the beginning of next year to close
out the loan.

[Nathan Young]

On 31 Aug 2005 15:31:59 -0700, " >
wrote:

>I'm debating the purchase of a plane and I was wondering what the
>current rates are that anyone has gotten for financing on an aircraft
>for a loan amount of $50-60K for either a 5, 7, or 10 year term. I know
>that AOPA can quote this, and I'll be calling them tomorrow during
>business hours. However I wanted to see what other people had found by
>shopping around.

Aviation loans tend to have higher rates than homes, cars, and even
boats. I would expect somewhere between 8 and 10% depending on term
and credit rating.

If you have access to a line of credit on your home, look into using
that - better rates and the interest will be tax deductible.

-Nathan

[John Doe]

MBNA from AOPA quoted me 6.7% but I've heard of terms to get it down to 5.5%

> wrote in message
ups.com...
> I'm debating the purchase of a plane and I was wondering what the
> current rates are that anyone has gotten for financing on an aircraft
> for a loan amount of $50-60K for either a 5, 7, or 10 year term. I know
> that AOPA can quote this, and I'll be calling them tomorrow during
> business hours. However I wanted to see what other people had found by
> shopping around.
>
> Thanks,
> Eric
>

[John Doe]

Must be nice to have so much money one wouldn't have to finance.


"Robert M. Gary" > wrote in message
oups.com...
> Its amazing to me that some people finance their personal aircraft. The
> monthly costs associated with owning an aircraft are so massive I can't
> imaging servicing a loan on top of that.
>
> -Robert, M20F
>

[Chris Schmelzer]

In article . com>,
"Robert M. Gary" > wrote:

> Its amazing to me that some people finance their personal aircraft. The
> monthly costs associated with owning an aircraft are so massive I can't
> imaging servicing a loan on top of that.
>
> -Robert, M20F


Forgive me for not being rich!

--
Chris Schmelzer, MD
University of Arizona, UPH Kino

[Peter R.]

Chris Schmelzer > wrote:

> In article . com>,
> "Robert M. Gary" > wrote:
>
>> Its amazing to me that some people finance their personal aircraft. The
>> monthly costs associated with owning an aircraft are so massive I can't
>> imaging servicing a loan on top of that.
>>
>> -Robert, M20F
>
> Forgive me for not being rich!

Robert indicated that he *cannot* imagine servicing a loan on top of
monthly ownership costs. Doesn't come across as rich to me. <rimshot>

At least one very wealthy person I know finances his aircraft because
owning an aircraft is a large tax deduction for him (in the US) and because
he is able to receive a larger return on his current capital than the cost
of financing.

--
Peter
























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[George Patterson]

Peter R. wrote:
>
> At least one very wealthy person I know finances his aircraft because
> owning an aircraft is a large tax deduction for him (in the US) and because
> he is able to receive a larger return on his current capital than the cost
> of financing.

I suppose this is a business aircraft? Us peons can only deduct loans on our
houses. Of course, you can take out a loan on the house and use the money to buy
a plane, but that's not exactly what most people mean by financing an aircraft.

George Patterson
Give a person a fish and you feed him for a day; teach a person to
use the Internet and he won't bother you for weeks.

[Peter R.]

George Patterson > wrote:

> I suppose this is a business aircraft? Us peons can only deduct loans on our
> houses. Of course, you can take out a loan on the house and use the money to buy
> a plane, but that's not exactly what most people mean by financing an aircraft.

No, I was referring to the accelerated depreciation that the Fed currently
allows. I wasn't even thinking about deducting the interest on the loans.

--
Peter
























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[George Patterson]

Peter R. wrote:
>
> No, I was referring to the accelerated depreciation that the Fed currently
> allows. I wasn't even thinking about deducting the interest on the loans.

Then wouldn't he make even more if he bought the plane outright?

George Patterson
Give a person a fish and you feed him for a day; teach a person to
use the Internet and he won't bother you for weeks.

[Robert M. Gary]

"At least one very wealthy person I know finances his aircraft because
owning an aircraft is a large tax deduction for him "

Only if you can consider it a business expense.

[Robert M. Gary]

"Must be nice to have so much money one wouldn't have to finance"

Must be nice to have so much money one can afford to make the monthly
loan payments AND pay the maintenance and other costs to keep the
aircraft. My plane costs me $500/month just to sit on the ground (base
annual, insurance, property taxes, tie down, etc) . That doesn't even
include fixing anything that may break as a result of flying.

-Robert

[Robert M. Gary]

You'd probably be better off refinancing your house and taking the cash
out.

[Jon Kraus]

I don't know how anyone would have so much money to pay cash for a plane
that is worth very much. I'm not talking about a 20k 152 either. Our
"J" model Mooney was over 100k and my partner (a brain surgeon with a
lot more money than me) and I decided to finance 90% of our purchase. To
me the 6% interest on the financed money can be put to better use
elsewhere.

You have a partner in your "F" too, if I remember correctly?

Jon Kraus
'79 201
4443H @ TYQ


Robert M. Gary wrote:
> "Must be nice to have so much money one wouldn't have to finance"
>
> Must be nice to have so much money one can afford to make the monthly
> loan payments AND pay the maintenance and other costs to keep the
> aircraft. My plane costs me $500/month just to sit on the ground (base
> annual, insurance, property taxes, tie down, etc) . That doesn't even
> include fixing anything that may break as a result of flying.
>
> -Robert
>

[Jon Kraus]

We were happy with NAFCO (National Aircraft Finance Company) If you have
questions you can call them at 800-999-3712 or email Bill Leckie -
. No associated interest just happy with the process.
We financed through
Citizens National Bank
390 Main St
Laurel, MD 20707-4199

We got 6% last October so I don't know what it is right now. Good luck
with your purchase. Get a THROUGH pre-buy and then put 10% of the
purchase price back for repairs in the first year.

Jon Kraus
'79 Mooney 201
4443H @ TYQ


wrote:

> I'm debating the purchase of a plane and I was wondering what the
> current rates are that anyone has gotten for financing on an aircraft
> for a loan amount of $50-60K for either a 5, 7, or 10 year term. I know
> that AOPA can quote this, and I'll be calling them tomorrow during
> business hours. However I wanted to see what other people had found by
> shopping around.
>
> Thanks,
> Eric
>

[Peter R.]

George Patterson > wrote:

> Then wouldn't he make even more if he bought the plane outright?

Most likely, no. Given that the cost of money is around 6% give or take a
few tenths, someone with that much money will be better off investing the
cash and financing the aircraft.

Once the aircraft purchase is made, the Feds will then allow this
individual to take accelerated depreciation (largest the first year, and
then a bit smaller until the aircraft is fully depreciated five years
later) on the purchase price of the aircraft, not the equity (or lack
thereof).

There are caveats, of course, but the strategy above will probably be the
most financially advantageous for someone with the cash to be able to cover
the complete purchase price of an aircraft.

--
Peter
























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[Peter R.]

"Robert M. Gary" > wrote:

> "At least one very wealthy person I know finances his aircraft because
> owning an aircraft is a large tax deduction for him "
>
> Only if you can consider it a business expense.

Someone with enough money to purchase a high performance aircraft for cash
would have tax accounting resources at his/her disposal to be able to
structure the purchase as a business purchase.

--
Peter
























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[Victor J. Osborne, Jr.]

I've got plenty of resources but I have yet to find a legit way to call my
flying a business or create a business that I could use the pane for. I
wanted to do a rent a wreck at FBO's w/o a courtesy car but I can't find
insurance.

Victor J. (Jim) Osborne, Jr.

>
> Someone with enough money to purchase a high performance aircraft for cash
> would have tax accounting resources at his/her disposal to be able to
> structure the purchase as a business purchase.
> --
> Peter

[Victor J. Osborne, Jr.]

That's what I do. The money works better in the equities market & I don't
have to pay capital gains to take it out and use as a payment. Anyone who
says an aircraft appreciates in value enough to pay for the difference is
fooling themselves.

Thx, {|;-)

Victor J. (Jim) Osborne, Jr.

"Nathan Young" > wrote in message
...
> On 31 Aug 2005 15:31:59 -0700, " >
> wrote:
>
> If you have access to a line of credit on your home, look into using
> that - better rates and the interest will be tax deductible.
>
> -Nathan

[OtisWinslow]

Well Robert .. not everyone is rich and can afford to just plop
down the money. Without financing many would not own a plane. If
you can afford to that's great. Don't criticize those less fortunate.



"Robert M. Gary" > wrote in message
oups.com...
> Its amazing to me that some people finance their personal aircraft. The
> monthly costs associated with owning an aircraft are so massive I can't
> imaging servicing a loan on top of that.
>
> -Robert, M20F
>

[Matt Barrow]

"Peter R." > wrote in message
...
> Chris Schmelzer > wrote:
>
> > In article . com>,
> > "Robert M. Gary" > wrote:
> >
> >> Its amazing to me that some people finance their personal aircraft. The
> >> monthly costs associated with owning an aircraft are so massive I can't
> >> imaging servicing a loan on top of that.
> >>
> >> -Robert, M20F
> >
> > Forgive me for not being rich!
>
> Robert indicated that he *cannot* imagine servicing a loan on top of
> monthly ownership costs. Doesn't come across as rich to me. <rimshot>
>
> At least one very wealthy person I know finances his aircraft because
> owning an aircraft is a large tax deduction for him (in the US) and
because
> he is able to receive a larger return on his current capital than the cost
> of financing.

I think he (Chris ?) was confusing "personal aircraft" with one owned just
for pleasure trips, not for business where it's a most valuable tool.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

[Robert M. Gary]

"You have a partner in your "F" too, if I remember correctly?"

Yes, I do have a partner for similar reasons. Although I could pay cash
for my plane I thought it would be better to keep more of my money in
the market. Besides, unless you fly at least 100 hours per year, it
just doesn't make sense to own by yourself and its not good for the
plane. My partner and I paid cash $80K.

Jon, are you on the Mooney list now? You should check out aviating.com
to sign up for either the general Mooney list or the tech list. Both
are VERY helpful to Mooney owners.
-Robert

[Robert M. Gary]

"Someone with enough money to purchase a high performance aircraft for
cash
would have tax accounting resources at his/her disposal to be able to
structure the purchase as a business purchase. "

I do have enough money to pay cash for a plane but I still can't make
it a business expense. My business travel schedule doesn't work well
for Mooney flying. I would have to actually make business trips in the
Mooney. As I recall, you just document that 51% of your trips for
business related. I did incorporate my Mooney but the corp doesn't
generate any cash (other than what I put in every month:) ).

-Robert

[Jon Kraus]

Yes I am subscribed to the Mooney list... It has an unbelievable amount
of great information for Mooney drivers like us... I think that is how I
knew you had a partner...

Jon Kraus
'79 Mooney 201
4443H @ TYQ

Robert M. Gary wrote:
> "You have a partner in your "F" too, if I remember correctly?"
>
> Yes, I do have a partner for similar reasons. Although I could pay cash
> for my plane I thought it would be better to keep more of my money in
> the market. Besides, unless you fly at least 100 hours per year, it
> just doesn't make sense to own by yourself and its not good for the
> plane. My partner and I paid cash $80K.
>
> Jon, are you on the Mooney list now? You should check out aviating.com
> to sign up for either the general Mooney list or the tech list. Both
> are VERY helpful to Mooney owners.
> -Robert
>

[Dave Butler]

Jon Kraus wrote:
> Yes I am subscribed to the Mooney list... It has an unbelievable amount
> of great information for Mooney drivers like us...

Could you give a pointer to the list? I tried it once before and found it
unacceptably chatty, but maybe I'll try it again.

Thanks. Dave

[Robert M. Gary]

Dave,
There are two lists. There is a general lists and sometimes gets very
chatty and crappy. Other times its great. There is also a tech list
that is pretty tightly controlled (usually). The tech list is just SO
AWESOME! Just two weekends ago I wanted to replace a vent in my Mooney
and couldn't figure out how to get it out (the maint. manual leaves a
lot to the mind). I had answers right away.

For me, the trick is to NOT use your regular email account to
subscribe. I created an email account in yahoo that I only use for the
Mooney list. I sometimes go months without looking at it because I'm
busy. Then, I'll have an issue and I'll log into that account, ask a
question and get a quick answer. Many of the operators of our Mooney
factory service centers are on the list too (Tom from Top Gun, Paul and
Robert from Lake Aero, Don from Maxwell Aviation, etc). These guys are
the gurus of keeping Mooneys running (and I've had each of them work on
my Mooney).

Anyway, to subscribe go to aviating.com.

-Robert

[Robert M. Gary]

"Once the aircraft purchase is made, the Feds will then allow this
individual to take accelerated depreciation"

True, but financing has nothing to do with accelerated depreciation,
does it? I have a student (and fellow Mooney driver) who just bought a
Hummer and a Corvette last year for just this reason. He's a home
inspector and can write off the vehicles because he travels around the
state in his work.

-Robert

[Doof]

"Robert M. Gary" > wrote in message
ups.com...
> "Once the aircraft purchase is made, the Feds will then allow this
> individual to take accelerated depreciation"
>
> True, but financing has nothing to do with accelerated depreciation,
> does it? I have a student (and fellow Mooney driver) who just bought a
> Hummer and a Corvette last year for just this reason. He's a home
> inspector and can write off the vehicles because he travels around the
> state in his work.
>
I believe that automobile have a celing on deductibiity. I'd guess people
got tired of subsidzing BMW's and Hummers. IIRC, the most you can deduct is
the cost of a average mid-sized car. Afther that, you're on your own.

[Peter R.]

"Robert M. Gary" > wrote:

> True, but financing has nothing to do with accelerated depreciation,
> does it?

True. I guess I got carried away in justifying why someone would purchase
an expensive aircraft with financing.

--
Peter
























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[Jon Kraus]

Or you can use your regular email account and put a filter on it to
direct for the tech stuff or
for the regular stuff to separate folders. Whenever
I need someting specific to my Mooney I go to the Mooney list. Example -
we jsut had a STCT30 autopilot installed in our '79 "J" and we saved 3-4
AMU's by asking the Mooney Gods about the best place to go!!

Currently there are some awesome pireps on the new Garmin 396 that we
are thinking about getting (hey it's only money right?). I'm sure that
the Cessna, Piper, Cirrus, and Bo folks hafve such groups too. I find
them a very valuable tool indeed...

Jon Kraus
'79 Mooney 201
4443H @ TYQ

Robert M. Gary wrote:
> Dave,
> There are two lists. There is a general lists and sometimes gets very
> chatty and crappy. Other times its great. There is also a tech list
> that is pretty tightly controlled (usually). The tech list is just SO
> AWESOME! Just two weekends ago I wanted to replace a vent in my Mooney
> and couldn't figure out how to get it out (the maint. manual leaves a
> lot to the mind). I had answers right away.
>
> For me, the trick is to NOT use your regular email account to
> subscribe. I created an email account in yahoo that I only use for the
> Mooney list. I sometimes go months without looking at it because I'm
> busy. Then, I'll have an issue and I'll log into that account, ask a
> question and get a quick answer. Many of the operators of our Mooney
> factory service centers are on the list too (Tom from Top Gun, Paul and
> Robert from Lake Aero, Don from Maxwell Aviation, etc). These guys are
> the gurus of keeping Mooneys running (and I've had each of them work on
> my Mooney).
>
> Anyway, to subscribe go to aviating.com.
>
> -Robert
>

[Robert M. Gary]

"I believe that automobile have a celing on deductibiity"

Actually, its the other way around. A Hummer of a giant SUV gets better
deductions than a small car because of its weight. I guess the IRS
considers only real workers drive cars that heavy. :) Personally, if
its got leather interior, its probably not an industrial vehicle. :)

[Don Hammer]

On 31 Aug 2005 17:01:29 -0700, "Robert M. Gary" >
wrote:

>Its amazing to me that some people finance their personal aircraft. The
>monthly costs associated with owning an aircraft are so massive I can't
>imaging servicing a loan on top of that.
>
>-Robert, M20F

Robert,

There are all kinds of folks that do things for different reasons. A
recent client of mine wrote a check for a $43M Gulfstream. His
reason? Banks just ask too many silly questions. To him it was no
different than you or I buying a bicycle. The $4M a year it costs him
keep it gets lost with the rest of his bills. He's just on a different
level than you or I.

[Doug]

Sometimes assets are financed because of liability concerns. If someone
sues the corp and wins, the bank comes first. Plaintiff doesn't get
much. Also, sometimes assets are financed to insure good title,
insurance etc. And then there is leverage, you can simply own more if
you borrow. Lots of reasons other than "can't afford to pay cash".

[Robert M. Gary]

I agree. You have to be pretty loaded to afford to finance a plane.

[John Doe]

"Robert M. Gary" > wrote in message
oups.com...
>I agree. You have to be pretty loaded to afford to finance a plane.
>

Why do you say that? I just payed off my two cars and now have about $1000
extra cash a month and am finally starting to consider buying a plane.

Why do I have to be loaded?

[Ron Rosenfeld]

On 31 Aug 2005 17:01:29 -0700, "Robert M. Gary" > wrote:

>Its amazing to me that some people finance their personal aircraft. The
>monthly costs associated with owning an aircraft are so massive I can't
>imaging servicing a loan on top of that.
>
>-Robert, M20F

Seems like a no-brainer to me.

I've got money in my Roth IRA that I could use; but that money has been
earning me 14-15% per year (since 1999) tax-free.

Why should I withdraw it when I can get a loan for an aircraft at less than
1/2 that rate?

Same rationale for purchasing a auto a few years ago. Yes I could have
paid cash; but I could also finance it for five years at zero percent
interest.




Ron (EPM) (N5843Q, Mooney M20E) (CP, ASEL, ASES, IA)