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Need financing help due to student loans, doctors loan?


rwabdu
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21 minutes ago, rwabdu said:

I am having some issues getting financing, got turned down by AOPA today due to my student loans. 

Anyone have any recommendations? Anyone with experience getting a physicians loan for an airplane?

I don't know if there are doctor's loans for airplanes like there are for houses.

I would try other sources of financing besides AOPA, my experience with their loan department is kind of dated but they were not very competitive when we investigated them for sub-6 figure loans (as most of our Mooneys are), they had pretty onerous terms for low value loans. There's also specialty aircraft financing places like Dorr, First Pryority, etc.  We ended up financing with our local credit union which required a few more hoops to get the loan but they had great terms (admittedly they behaved like we were asking for a loan on a $50 million jet, not basically a mid-range sports car/decked out pick up truck that they handed out loans for every day, and we were securing it with three very stable professional incomes in a partnership with great credit.). We know someone who recently got a loan through Banterra bank for a Mooney.

Other option would be to finance something else in your life (e.g. your car, etc.) and then pay more towards your Mooney in cash.  In retrospect, having our cars paid off and an airplane loan was probably not the most financially sensible arrangement of money (considering at the time car loans were actually cheaper than airplane loans).  If a co-signer is an option, you could try that too, but I know not everyone has that luxury in their family.

Edited by Becca
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Airplanes can be pretty goofy to get financing for…

Most lending institutions don’t have the experience…

One bank I spoke with was excited to tell be that they finance planes….. over a million dollars…. :)

AOPA has a lending partner… for a while it was Bank of America (?)…

For such a large banking institution… they had a person that handled their aviation loan business….

Expect AOPA to help grease the wheels of getting a loan.  At an added cost.  From their one partner…

One of the major hurdles to get over will be assigning a value to the plane…

 

Being fresh out of school, with great potential, and no cash…. Can be extra challenging….

Being aged, have a house, and extensive financial track record… Can be as easy refinancing a house…. Home loans are at an all time low interest rate…

 

The usual disclaimer follows….   Don’t lose the house because something happens to the plane…..   :)

 

See if @Seth has any insight on airplane loans…

 

PP thoughts only, not a finance guy…

Best regards,

-a-

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13 hours ago, Bartman said:

My best advise from experience....

Don’t finance anything you don’t have to. 

Assumption is of course that you can afford to make payments on all of those loans and still maintain a standard of living and fly etc.

So why not for a short time take all of those aircraft loan payments and flying expenses and get your other loans paid off? Sure you have to delay gratification for awhile but then your in a much better position if your want a loan to get the lowest possible rate, or even pay cash, paying for a hobby is more responsible, save the loans for a house maybe, once you get into the cash position that you don’t have to have a loan, it seems then you qualify for very low interest rates.

I’ll admit after almost twenty years I have a house payment now,  and it goes against my best judgement, but based on advice from my advisor it was better to leave money invested and get a 2% loan than to pay cash, so there are exceptions of course, like a zero percent car loan for instance, if your getting the best price anyway it’s illogical  to pay cash as opposed to a zero percent loan.

I know there is a shed load of people who will cry that they have xx number of loans and do fine, but it’s my opinion if they had just delayed that for awhile and paid cash, they would have been even better off.

Pair that with the belief that this economy is a transient thing, and then maybe being on a cash basis makes even more sense. 

‘If you get it into the habit of living slightly below your means as opposed to slightly above them, it’s a much less stressful and more enjoyable experience.

Edited by A64Pilot
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13 hours ago, rwabdu said:

I am having some issues getting financing, got turned down by AOPA today due to my student loans. 

Perhaps there is a reason AOPA thinks an airplane loan on top of student loans are a bad risk?

Perhaps smaller student loan balances and a smaller airplane loan would be more palatable to the lenders?

Good luck.

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Posted (edited)
13 hours ago, JohnZ said:

@rwabdu Are you in residency/fellowship? Or an attending? I think these are the terms that are used. My wife is in residency, so I can appreciate where you are coming from. 

I am a surgical resident, soon to be vascular surgery fellow. Finances of someone at my stage are really strange due to high debt but also high earning potential just a few years down the road, Income changes by a factor of 10. The reason not to wait to buy an airplane till then? I really could use one now to travel from where I will be working for the next few years to see my family / girlfriend 450 miles away. .. And, the longer that I delay owning a plane, the more time in life I miss out on having one.

As for finances, investments are making many times more than the interest rate on loans, it makes a lot more financial sense for me to borrow at 5.5% for a loan and student debt than sell investments that grew at 10-25% last year... it's one thing to pay ~500/month in a loan, totally different sacrifice to cash out investments and financial reserves that would be my future retirement or the downpayment on a home to pay for an airplane.  

Anyways, Thank you! I really appreciate all the help I always get on this forum! hope to be joining your ranks as a Mooney owner soon, calling the banks you all suggested right now.

Edited by rwabdu
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54 minutes ago, rwabdu said:

I am a surgical resident, soon to be vascular surgery fellow.  I really could use one now to travel from where I will be working for the next few years to see my family / girlfriend 450 miles away. 

I understand that. But residency takes a lot of time and not much sleep. Fellowship may be a bit better, or not depending on specifics. 450 NM is at least three hours in the air, plus time on the ground. Fatigue is real and my guess is many of the flights you are contemplating will be at night, and often after a 60-70 hour work week. We want you to be alive to experience all of the thing you mention.

A few years ago I had to use the allowance of counting night takeoffs and landings toward the 100 night hours so I could get my ATP. I didn't have nearly enough night hours because I, 100% refuse to fly when I'm tired.  Everything is a risk-benefit analysis and this one is favoring risk over benefit, in my very humble (but BTDT) opinion.

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16 hours ago, rwabdu said:

I am having some issues getting financing, got turned down by AOPA today due to my student loans. 

Anyone have any recommendations? Anyone with experience getting a physicians loan for an airplane?

Jimmy Garrison at GMax American Aircraft could probably point you in the right direction.

https://www.gmaxamericanaircraft.com/

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1 hour ago, philip_g said:

Aircraft financing is weird. Natalie at air fleet has done several for me and been decent. After the work you've put in to get where you are you deserve to treat yourself imo.

+1 for AirfleetLezonne helped dozens of my Diamond customers over the years, and I consider her a friend.

A broker will know the lay of the land better than a loan officer at an individual bank.  Different banks will have different appetites for your risk.

-dan

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18 hours ago, rwabdu said:

I am having some issues getting financing, got turned down by AOPA today due to my student loans. 

Anyone have any recommendations? Anyone with experience getting a physicians loan for an airplane?

I found PilotBank in Florida.  I'm a physician with other loans (home and school), and the bank AOPA pointed me to offered 7.5% 15 years for 20% down.  I called PilotBank directly and asked what they could do (I saw an ad for them), and they offered 4% 30 years for 20% down, so I went with them.  Application was pretty easy and quick, and no significant impact on the buying process.

As an early-career physician, financing stuff makes total sense.  Few other career people are in your situation where you are cash-poor now but have a long-term stable career with high security.

On the other hand, if you don't have your ticket yet (or are planning on an IFR rating), I would recommend against buying a plane now.  Your training WILL happen in fits and starts during residency, and you will find IFR training as intensive as studying for the boards.  The amount of reserve brainpower you have for flight training will be dictated by your medical training, and that means your flight training will take longer and be unpredictable.  That's probably not a good setting to be buying a plane.

Also realize that any attempt to use GA as a "practical" means of transportation should be disposed of now.  It's a (expensive) "hobby" that sometimes, occasionally, maybe, turns out to be helpful on trips and is almost never financially equivalent to flying Southwest.  A Mooney and an IFR rating will increase the chances that it's practical, but you'll also have to spend the mental energy on flight planning, ADM and flying.  Every vacation will include daily (or more) weather checks and flight planning which only counts as vacation time if you enjoy that sort of thing.

Edited by jaylw314
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1 hour ago, jaylw314 said:

I found PilotBank in Florida.  I'm a physician with other loans (home and school), and the bank AOPA pointed me to offered 7.5% 15 years for 20% down.  I called PilotBank directly and asked what they could do (I saw an ad for them), and they offered 4% 30 years for 20% down, so I went with them.  Application was pretty easy and quick, and no significant impact on the buying process.

As an early-career physician, financing stuff makes total sense.  Few other career people are in your situation where you are cash-poor now but have a long-term stable career with high security.

On the other hand, if you don't have your ticket yet (or are planning on an IFR rating), I would recommend against buying a plane now.  Your training WILL happen in fits and starts during residency, and you will find IFR training as intensive as studying for the boards.  The amount of reserve brainpower you have for flight training will be dictated by your medical training, and that means your flight training will take longer and be unpredictable.  That's probably not a good setting to be buying a plane.

Also realize that any attempt to use GA as a "practical" means of transportation should be disposed of now.  It's a (expensive) "hobby" that sometimes, occasionally, maybe, turns out to be helpful on trips and is almost never financially equivalent to flying Southwest.  A Mooney and an IFR rating will increase the chances that it's practical, but you'll also have to spend the mental energy on flight planning, ADM and flying.  Every vacation will include daily (or more) weather checks and flight planning which only counts as vacation time if you enjoy that sort of thing.

You know I always give this advice about GA and I think it’s important not to raise expectations here.  When I bought the plane I thought it would be a $100 hamburger machine plus maybe a flying adventure a couple times a year, maybe regular trips to OSH, and I would still use airlines for everything else. 


But it turns out that, after owning an airplane for 10 years, the reality is way more nuanced and the plane is a lot more useful. Admittedly I am married to a professional pilot and mechanic and we are comfortable using the full IFR capabilities of our airplane and with two pilots it’s easier to deal with fatigue and we rarely have a maintenance issue preventing us from flying.  But we use our airplane far more efficiently than traveling by airlines.  Many of the places we go to visit family or vacation are 2+ hours from the nearest major airport, and to get to that airport requires changing planes and probably 2 hrs transiting airports on either end.   Last summer we even flew from Montana to DC in one day!  (3 legs, 2 pilots, took off at 6 am, landed at 9 pm, did lose time due to time change and it was arguably the most exhausting day we’ve spent flying.)

I can’t say it’s cheaper, because we fly for free on the airlines.  But it’s way more convenient “oh let’s leave at 3 pm instead of 9 am because I had this meeting pop up.” And “let’s throw this extra pottery turtle in the plane to give to my grandma.”   In 10 years of flying, there’s been a couple trips that we’ve had to delay a day for weather and a couple diversions to wait out thunderstorms, but for the most part it’s been a pretty effective traveling machine.  We probably use our plane for a significant trip monthly if not more frequently.  I travel via airline for work travel (a lot before the pandemic) and I can easily say that I’ve had far more cancellations and delays on the airlines than in my personal plane.   We estimate once all the fixed costs are paid for just to have the plane sitting on the ground, it costs about $60/hr to operate in fuel and depreciation and wear.  $240 ain’t bad for a 600 mile trip for 2.  

anyway I wish the OP good luck with his mission!

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I got my Private in the summer between my IM residency.  It did take time and effort, but for me it was also a much needed distraction from the medical training. I rented and flew a few times after the checkride, but not much. After completion of residency I joined a local flying club and flew an Archer for 55/hr including fuel. Not kidding, this was a well funded club and the 172 and Archer were well maintained with benefactors who wanted to just wanted to make it possible for people to fly.  
 

Two years later I got the itch to buy and bought my J in 2007. Those who remember know that was the top of the market not only for houses but more so for airplanes and it was ugly after that for many years.  We are in a similar market for aircraft and housing and the eventual downturn may not happen today, but living thru that environment there is no way I would buy a house, car, or airplane today.  Two years from now I think I would be upside down again. 
 

I should have flown that Archer for 55/hr wet for a couple more years......

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6 hours ago, rwabdu said:

I am a surgical resident, soon to be vascular surgery fellow. Finances of someone at my stage are really strange due to high debt but also high earning potential just a few years down the road, Income changes by a factor of 10. The reason not to wait to buy an airplane till then? I really could use one now to travel from where I will be working for the next few years to see my family / girlfriend 450 miles away. .. And, the longer that I delay owning a plane, the more time in life I miss out on having one.

As for finances, investments are making many times more than the interest rate on loans, it makes a lot more financial sense for me to borrow at 5.5% for a loan and student debt than sell investments that grew at 10-25% last year... it's one thing to pay ~500/month in a loan, totally different sacrifice to cash out investments and financial reserves that would be my future retirement or the downpayment on a home to pay for an airplane.  

Anyways, Thank you! I really appreciate all the help I always get on this forum! hope to be joining your ranks as a Mooney owner soon, calling the banks you all suggested right now.

I remember so many great saying from my surgery rotation such as: “eat when you can, sleep when you can and don’t (mess) with the pancreas” as well as “just because you CAN do something doesn’t mean you SHOULD.”

I’m sure you can find someone to lend you the money and get a plane, but as @KLRDMDpointed out, having access to a plane may not improve your life expectancy. If you’re new to flying and have places that you “need” to get to then you will probably put yourself in some dangerous situations. With small planes, you always need a Plan B.

Personally, I commute to work in my plane and 90% of the time I end up flying. But not at night, or after seeing patients all day, or if I’m tired, or if the weather is bad, or if I don’t feel good. Get-home-itis isn’t a real medical disease but it’s one of the leading causes of death of pilots.

Sorry to turn your financial question into unsolicited life advice but I like having vascular surgeons answer the phone when I call so I’d like to keep as many around as possible. 

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7 hours ago, rwabdu said:

I am a surgical resident, soon to be vascular surgery fellow. Finances of someone at my stage are really strange due to high debt but also high earning potential just a few years down the road, Income changes by a factor of 10. The reason not to wait to buy an airplane till then? I really could use one now to travel from where I will be working for the next few years to see my family / girlfriend 450 miles away. .. And, the longer that I delay owning a plane, the more time in life I miss out on having one.

As for finances, investments are making many times more than the interest rate on loans, it makes a lot more financial sense for me to borrow at 5.5% for a loan and student debt than sell investments that grew at 10-25% last year... it's one thing to pay ~500/month in a loan, totally different sacrifice to cash out investments and financial reserves that would be my future retirement or the downpayment on a home to pay for an airplane.  

Anyways, Thank you! I really appreciate all the help I always get on this forum! hope to be joining your ranks as a Mooney owner soon, calling the banks you all suggested right now.

I don't know squat about aircraft loans, but I wish I'd had the balls to get into flying and aircraft ownership at your stage in life (back when I was a broke surgical resident). I didn't come from money and simply couldn't visualize what a favorable financial trajectory might look like and the life options it could offer me.  My financial fears were ridiculous in retrospect - the demands on time are still substantial, but with discipline and commitment there is enough that can be carved out in the latter part of ones training. Don't let anyone here discourage you.

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