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