Financing a Mooney

[phecksel]

I think I found a plane... it's a bit pricier than I wanted, but it's a motivated seller, and it's a fabulous price.

 

Asking price in 90k.  At that level, what kind of financing terms are available, length, rate, and amount?

 

Suggestions on financing companies?  I did ask my credit union, they don't do planes.

[Jamie]

You didn't ask, but I'll give the advice anyway...

 

Self finance. That is, save the money up. The market direction is working in your favor.... planes are getting cheaper (buyer's market), so time spent saving will be well, um, spent. I know this is a generalization, but imho, if you have to get a loan for a depreciating asset that's purely for pleasure, you probably can't afford the toy.

 

Even if you can't save the entire amount up, the more you have the more likely someone will finance at a rate that won't be entirely like sticking a gun in your face, and you'll reduce your monthly payment (cash flow is king).

 

That said.... are they still giving out second mortgages (excuse me, "home equity loans") to anyone that can fog a mirror?

[rbridges]

several companies specialize in aircraft finance.  I've used US Aviation and later refinanced with AOPA.  US Aviation was willing to do 15 yrs but AOPA (BofA) wanted 10 years when I refinanced.  Both wanted 20% down.  With a newer, more expensive plane, they may have different terms.

[88drvr]

If you are financing over 50k, I know US aircraft finance will do 20 years with as little as 10 percent down based on your credit and the book value of the aircraft. Depending on how much you put down, I would guess rates anywhere between 4.5 to 6 percent.

[kgbpost]

I would suggest Dan Garzelloni www.milehighmoney.com. He's a loan broker which i would highly recommend for a couple of reasons: 1. they work with a number of different banks and can shop your loan around (best rate/terms) 2. He will only run your credit once vs. applying at different banks yourself and each running a credit search which could ding your score 3. Alot of banks only look at your monthly income/expenses and don't consider assets. If you're a business owner and reinvest income to grow your business while minimizing income taxes they consider you poor and won't lend. Brokers know and work with banks that are willing to look at your whole financial picture. 4. They get paid to represent you and a good one should and will.

 

As far as minimum loan amount, if i'm not mistaken with alot of lenders its 80,000, some maybe 50,000. 

 

I will vouch for Dan, he's a good guy. 

[John Pleisse]

Jimmy Gipps. Call MAPA, they'll have his info.

[N1026F]

20% down over 20 years (std. amortization) will make your payments under $500.00 at the present rates.  You need to talk to your CPA about the present Sec. 179 rules on depreciation and interest deductions that may affect your adjusted gross income--i.e. talk to CPA.  You can also talk to Jimmy Garrison at All American. He's a good guy and will offer you some practical advise without you having to buy a plane from him first. 

[scottfromiowa]

You didn't ask, but I'll give the advice anyway...

 

Self finance. That is, save the money up. The market direction is working in your favor.... planes are getting cheaper (buyer's market), so time spent saving will be well, um, spent. I know this is a generalization, but imho, if you have to get a loan for a depreciating asset that's purely for pleasure, you probably can't afford the toy.

 

Even if you can't save the entire amount up, the more you have the more likely someone will finance at a rate that won't be entirely like sticking a gun in your face, and you'll reduce your monthly payment (cash flow is king).

 

That said.... are they still giving out second mortgages (excuse me, "home equity loans") to anyone that can fog a mirror?

A part of me says..."Wow", that is harsh....and another part of me says "hey, he asked"...

[scottfromiowa]

And...speaking of "stick 'em up"...Insurance quote went UP for renewal...after a nube partner got a year under his belt...Guess I am getting some late quotes as this strikes me as B.S. of the highest order. Come on "says the agent"...what's 10% among friends...

[Jamie]

A part of me says..."Wow", that is harsh....and another part of me says "hey, he asked"...

 

The math is harsh... I'm just the messenger.

 

Take a concrete example:

 

   Financed $94,000 (If you can't afford the plane you probably can't afford the sales tax, figure 4%).

   Interest: 4%

   Period: 20 years

 

   Monthly payment: $569.62

   Interest paid: $42709.00

 

Now using my numbers (for my plane):

 

   Insurance: $2000 / yr

   Hangar: $210 * 12 = 2520

   Annual: $2000 (min)

 

Total fixed costs of 2000 + 2520 + 2000 = 6520 / 12 = 543.33 per month. Without flying.

 

Fly 4 hours a month @ 10 gal / hour * $6/gal = $240.00 a month.

 

With financing, he's looking at 570 + 543 + 240 = $1353 / month for not a whole lot of flying in a year, but it's average, apparently.

 

1353 * 12 = 16236. In a little less than 6 years at that rate, he could pay cash.

 

Financing a toy is dumb.

 

(that's harsh, but wtf.)

 

((Oh, and notice that this is -best- case. No maintenance, nothing broke, no oil change. The magic perfect airplane. ))

[pirate]

Also check MBNA but I sure like the advise KGBPOST gave. If you need to finance you need to finance that's how many of us got our planes. Years ago I financed my first two planes and have no regrets. Eventually I built up enough equity plus a little extra cash to pay for future airplanes.

Good luck have fun.

[Marauder]

Also check MBNA but I sure like the advise KGBPOST gave. If you need to finance you need to finance that's how many of us got our planes. Years ago I financed my first two planes and have no regrets. Eventually I built up enough equity plus a little extra cash to pay for future airplanes.

Good luck have fun.

MBNA is no longer. It was acquired by Bank of America. But I think they are still in the financing business for planes.

[pirate]

Showing my age I guess, yes Bank of America

[aaronk25]

Bank of America changed there lending requirements and put a hard stop to lending on older planes and boats, you'd have to look it up but I think the cut off is 30-35 years . No biggy if your looking at a newer bird, but sometimes the older tricked out ones are hard to finance.

[timpercarpio]

I totally agree with Jamie. For years I financed lots of things including airplanes. My last divorce forced me to live below my means. I'm now retired and debt free. I co-own a '78 J with a great partner. We pay cash for everything and don't buy anything we cannot afford.

[aviatoreb]

How about if your mutual fund and realestate investments are outperforming, and perhaps significantly outperforming 4% (or 2.99% someone said is now available)?  In that case it might feel good to take the money out of the investments to pay cash, but is it wise to give up some points like that?  With these unbelievably low rates, the traditional wisdom may be turned upside down for those with the cash.  Cash should not be sitting in the bank collecting 2%.  It should be out there in some sort of investment working for you, and in that case, it is not very hard to outperform a bank loan in these historically low rate times.  Just make sure you lock in that rate and don't get a balloon.

[phecksel]

Financing a toy is dumb.

 

(that's harsh, but wtf.)

 

((Oh, and notice that this is -best- case. No maintenance, nothing broke, no oil change. The magic perfect airplane. ))

Are you Dave Ramsey's son Jamie Ramsey?

 

LOL

 

I understand the risks and costs.  I'm right on the ragged edge of paying cash for a good C... however, found a most excellent deal that is significantly below market value.  My house is paid off, I'm carrying no mortgage, and no, I won't leverage my house to buy a toy

 

Dug deep into the cost analysis, one wild card is the annual.  I'm not sure if my former free lance mechanic is still in the business or not.  He's gotta be getting near retiring.  It was the ridiculous annual costs at a Mooney "specialist" that IMO did an awful job that lead me to this guy.

[Jamie]

Heh. no.

 

The numbers are what they are, but sometimes we go flying anyway.   The math would indicate either wait a little or buy less airplane, but the heart wants what it wants. Whatever you end up doing, I hope it works out for you.

[phecksel]

I totally agree with Jamie. For years I financed lots of things including airplanes. My last divorce forced me to live below my means. I'm now retired and debt free. I co-own a '78 J with a great partner. We pay cash for everything and don't buy anything we cannot afford.

Divorce was what forced me into selling my former C.  I was suddenly living way beyond my means, and it was one of the hardest decisions I've ever had to make.  My perfect maintenance free plane was suddenly eating me alive.  Every single time I flew, somthing expensive broke, minimum $500.  It was crazy time!

[phecksel]

Heh. no.

 

The numbers are what they are, but sometimes we go flying anyway.   The math would indicate either wait a little or buy less airplane, but the heart wants what it wants. Whatever you end up doing, I hope it works out for you.

Here's the math, plane that appraised 20% higher than the desperate to sell asking price.  If it's truly the deal I think it is, I could walk away tomorrow and sell it for more than I purchased it for.

 

Leverage is a powerful, and dangerous financial tool.

[quik flite]

Jamie offered some excellent and honest advise, these toys can easily cost $1000.00 per month without a payment, and for a few people it may make sense to finance, for most of us don't buy more than you can afford.

[Marauder]

Divorce was what forced me into selling my former C. I was suddenly living way beyond my means, and it was one of the hardest decisions I've ever had to make. My perfect maintenance free plane was suddenly eating me alive. Every single time I flew, somthing expensive broke, minimum $500. It was crazy time!

Unfortunately the cost of owning an airplane hasn't changed much. Take my comments below in the context of a 23 year aircraft owner and a person who has been married to the same person for 32 years. The important part about airplane ownership and your relationship with your spouse is that they need to understand that it is an integral part of your being. If that understanding doesn't exist, then every penny spent on the airplane in their mind is the same as being spent on a mistress or a gambling problem or a drug addiction. At a minimum they need to understand that aviation is who you are and in the best scenario share an interest or love of aviation. And beyond that understanding is a trust that your hobby is not going to result in financial hardship for the family. And that in itself can be a challenge considering the cost associated with aviation. My favorite line from my wife about airplane ownership is this: "Why couldn't you have had a cocaine addiction? It would've been cheaper."

[Hector]

Bank of America changed there lending requirements and put a hard stop to lending on older planes and boats, you'd have to look it up but I think the cut off is 30-35 years . No biggy if your looking at a newer bird, but sometimes the older tricked out ones are hard to finance.

They will finance max of 7 years for vintage Mooney

Sent from my iPad using Tapatalk HD

[mooniac15u]

The math is harsh... I'm just the messenger.

 

Take a concrete example:

 

   Financed $94,000 (If you can't afford the plane you probably can't afford the sales tax, figure 4%).

   Interest: 4%

   Period: 20 years

 

   Monthly payment: $569.62

   Interest paid: $42709.00

 

Now using my numbers (for my plane):

 

   Insurance: $2000 / yr

   Hangar: $210 * 12 = 2520

   Annual: $2000 (min)

 

Total fixed costs of 2000 + 2520 + 2000 = 6520 / 12 = 543.33 per month. Without flying.

 

Fly 4 hours a month @ 10 gal / hour * $6/gal = $240.00 a month.

 

With financing, he's looking at 570 + 543 + 240 = $1353 / month for not a whole lot of flying in a year, but it's average, apparently.

 

1353 * 12 = 16236. In a little less than 6 years at that rate, he could pay cash.

 

Financing a toy is dumb.

 

(that's harsh, but wtf.)

 

((Oh, and notice that this is -best- case. No maintenance, nothing broke, no oil change. The magic perfect airplane. ))

Since the discussion is about financing a plane the other fixed and operating costs don't factor in as they would be the same whether you finance or pay cash.

You also haven't factored in rental costs in your calculation of what he could save. Assuming the same 40 hours per year he would spend around $5,000 per year to rent a plane which you would have to deduct from what he could save in a year.

[rbridges]

And...speaking of "stick 'em up"...Insurance quote went UP for renewal...after a nube partner got a year under his belt...Guess I am getting some late quotes as this strikes me as B.S. of the highest order. Come on "says the agent"...what's 10% among friends...

I just switched companies. More hours and an instrument rating later, my quote went UP $300. The agent blamed it on rate increases. I understand, but 20% is ridiculous. I guess they aren't interested in the small guys. She found another company that was much cheaper, so I went with them.