FloridaMan Posted April 10, 2018 Report Share Posted April 10, 2018 My intention is to buy another airplane (likely a Mooney rocket) over the next couple of months. Aircraft loans are less than 5% these days. I’d expect any debt would be settled as soon as I sell my current airplane. How much do aircraft loans really cost compared to paying cash outright? Quote Link to comment Share on other sites More sharing options...
Hank Posted April 10, 2018 Report Share Posted April 10, 2018 Depends on your interest rate, and how long it takes your current plane to sell in order to pay off the loan. Quote Link to comment Share on other sites More sharing options...
Wayne Cease Posted April 10, 2018 Report Share Posted April 10, 2018 Depends on your interest rate, and how long it takes your current plane to sell in order to pay off the loan. ^ This. They are "simple" loans, i.e. no penalties or costs other than the interest. Your cost will be the interest paid while you have the loan.Sent from my SM-G950U using Tapatalk Quote Link to comment Share on other sites More sharing options...
ArtVandelay Posted April 10, 2018 Report Share Posted April 10, 2018 I think he’s asking about loans fees (origination fee, processing fee, etc) not the interest, CMIIW. Quote Link to comment Share on other sites More sharing options...
Hank Posted April 10, 2018 Report Share Posted April 10, 2018 1 hour ago, teejayevans said: I think he’s asking about loans fees (origination fee, processing fee, etc) not the interest, CMIIW. Credit Unions often have the best deals Quote Link to comment Share on other sites More sharing options...
Skates97 Posted April 10, 2018 Report Share Posted April 10, 2018 2 hours ago, teejayevans said: I think he’s asking about loans fees (origination fee, processing fee, etc) not the interest, CMIIW. I would have to go back and look at my loan docs but I think I paid $500 for the origination, title search, registration, etc... As Wayne said above I have no pre-payment fees. I ended up going with US Aircraft Finance and would use them again, good people to deal with. http://www.usaircraftfinance.com Quote Link to comment Share on other sites More sharing options...
carusoam Posted April 10, 2018 Report Share Posted April 10, 2018 Aopa is a great resource for comparison shopping. Easy to read and understand... Interest rates are looking to go higher as the economy slowly expands. Read every loan document word for word. Each paragraph explanes what you can and can’t do. The cost of goofing something up can be huge. Look for protection from mistakes from things like liens or other document errors... It would be a tragedy to lay out good money to not get the proper ownership... Make sure you can pay the loan off early without penalty. A car loan doesn’t allow this... well, it does, but you owe a chunk of interest payments for the length of the loan.... There are a lot of Mooneys with lost documents over the years. Something related to Mitsubishi finance and not keeping records over spans of time... all recoverable with effort. Title search and title insurance are for your financial protection... your finance company may require a PPI of some form. Depending on the size of the loan... Most of this is the costs of buying a plane, not so much the cost of the loan.... the only way to get all the small costs is to ask the finance companies. They have only a few ways to make money. Fees and interest rates. They will detail the fees they expect to get from you. Other types of loans may be available to you. Like a home equity loan... better costs, but much greater risk, you don’t want to lose your shirt, and your house... I went out of the way to not own two planes at the same time... that is a cost as well. About a year without flying...during the economic disaster of 2008... selling the plane, then looking to buy the next one... Is that the kind of costs being asked about? PP thoughts only, not a banker... Best regards, -a- Quote Link to comment Share on other sites More sharing options...
thomas1142 Posted April 10, 2018 Report Share Posted April 10, 2018 +1 for US Aircraft Finance. They were real easy to deal with, nothing to complicated in the process. Quote Link to comment Share on other sites More sharing options...
aggiepilot04 Posted April 10, 2018 Report Share Posted April 10, 2018 I have had a great experience with US Aircraft Finance as well, but they do charge pre-payment penalties if you pre-pay within the first 2 years (greater of 2% or $2,000 in the first year, 1% or $1,000 in the second year). I attempted to negotiate that out but was unsuccessful. I think Dave said they end up losing money otherwise...so it's likely par for the course unless you pay higher closing fees. Quote Link to comment Share on other sites More sharing options...
Bryan Posted April 10, 2018 Report Share Posted April 10, 2018 I did the same thing about a year ago with a lender: about $500-$600 in fees to close but that covered all the AeroSpace reports, title search and lender fees. There was then no fee for pre-payment or early payoff and my interest was 4.75%. This was not with US Aircraft Finance - tried them but the prepayment penalty swayed me away. I ended up using: Patrick Fallon Dorr Aviation Credit Corp., LLC Toll Free - 800-214-0066 www.dorraviation.com They are able to finance in-house and write the loan directly on the lender's paperwork. Super easy transaction. 1 Quote Link to comment Share on other sites More sharing options...
rbridges Posted April 10, 2018 Report Share Posted April 10, 2018 I financed my mooney initially. I can't remember any hidden fees. The only thing I noticed was the APR was slightly higher than buying a car. Quote Link to comment Share on other sites More sharing options...
Wayne Cease Posted April 10, 2018 Report Share Posted April 10, 2018 8 hours ago, Antares said: How much do aircraft loans really cost compared to paying cash outright? 3 hours ago, teejayevans said: I think he’s asking about loans fees (origination fee, processing fee, etc) not the interest, CMIIW. My point is that many of these loans do not have any of those fees. Depending upon how much you need to borrow while you sell the current plane LightStream may be an option. They will loan you up to $100k for an airplane. Set it for the longest term and the payments are low, and just pay it off when you have the proceeds from the sale of the current plane. Quote Link to comment Share on other sites More sharing options...
KLRDMD Posted April 10, 2018 Report Share Posted April 10, 2018 36 minutes ago, Bryan said: I ended up using: Patrick Fallon Dorr Aviation Credit Corp., LLC Toll Free - 800-214-0066 www.dorraviation.com They are able to finance in-house and write the loan directly on the lender's paperwork. Super easy transaction. While I almost always pay cash for my airplanes, I have financed twice. Both times were with Dorr and I have nothing but good things to say about them and the entire experience. Quote Link to comment Share on other sites More sharing options...
rpcc Posted April 10, 2018 Report Share Posted April 10, 2018 Home equity loan is something to consider. The interest on that money was deductible and may still be. Not sure about the new rules on that with the tax changes though. Quote Link to comment Share on other sites More sharing options...
RobertGary1 Posted April 10, 2018 Report Share Posted April 10, 2018 54 minutes ago, rpcc said: Home equity loan is something to consider. The interest on that money was deductible and may still be. Not sure about the new rules on that with the tax changes though. But it sounds like this is a temporary loan until he sells his current plane; so the fees associated with a home equity loan for a short term loan would probably make it not work out. -Robert Quote Link to comment Share on other sites More sharing options...
carusoam Posted April 11, 2018 Report Share Posted April 11, 2018 A loan to bridge the gap between buying one house and selling another is called a ‘bridge loan’. It may be a helpful term when discussing loans for this particular condition. When talking with a local bank regarding buying a plane. They had an aviation division.... and could finance new purchases of Jets. Used Mooneys... not so much... I got a new bank. AOPA had a relationship with Bank of America. The BoA group knew and understood used Mooney purchasing really well. All went smoothly. Refinancing after a couple of years made sense as interest rates were descending/crashing... Best regards, -a- Quote Link to comment Share on other sites More sharing options...
Bravoman Posted April 11, 2018 Report Share Posted April 11, 2018 Not that it is likely a factor for folks here, but the advise I have always heard is that it generally not advisable to do home equity loans for cars, boats or luxury purchases because a default risks the home. 1 Quote Link to comment Share on other sites More sharing options...
Tony Starke Posted April 11, 2018 Report Share Posted April 11, 2018 20 hours ago, KLRDMD said: While I almost always pay cash for my airplanes, I have financed twice. Both times were with Dorr and I have nothing but good things to say about them and the entire experience. +2 for Dorr, consumate professionals in the industry. Quote Link to comment Share on other sites More sharing options...
RobertGary1 Posted April 11, 2018 Report Share Posted April 11, 2018 Thinking about it, if I needed a temporary bridge loan like you’re talking about I’d probably just use a line of credit. No prepayment penalities and usually no set up fees. -Robert Quote Link to comment Share on other sites More sharing options...
jwilcoxon78 Posted April 11, 2018 Report Share Posted April 11, 2018 On 4/10/2018 at 11:01 AM, Bryan said: I did the same thing about a year ago with a lender: about $500-$600 in fees to close but that covered all the AeroSpace reports, title search and lender fees. There was then no fee for pre-payment or early payoff and my interest was 4.75%. This was not with US Aircraft Finance - tried them but the prepayment penalty swayed me away. I ended up using: Patrick Fallon Dorr Aviation Credit Corp., LLC Toll Free - 800-214-0066 www.dorraviation.com They are able to finance in-house and write the loan directly on the lender's paperwork. Super easy transaction. I went with these guys to. Even refinanced so to speak on an overhaul. Very easy on both accounts. Quote Link to comment Share on other sites More sharing options...
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