Another newbie topic - Aircraft loans are weird!

[BlueSky247]

Okay, I get it that these are considered luxury items and the underwriters need to properly mitigate risk. That doesn't keep some of the requirements from being a head scratcher.

 

It almost seems to me that when they want to know your liquidity and overall assets picture, you could just cash purchase the plane if you wanted to liquidate those assets. Yet people often walk in and finance six figure cars with nothing more than a credit check and signature. Not the same, I know - just seems really weird to me.

Hypothetically speaking - is this about what they are looking for? $100k plane, 20% down and something like 50% in liquid assets? They obviously want to make sure the first annual or any major expense isn't going to automatically render the plane abandoned. Am I understanding that right?

Maybe I'm just ranting.... I spent the weekend driving around and putting my name on hangar waiting lists 8 years long... 

[Fly Boomer]

  On 5/28/2024 at 5:12 PM, BlueSky247 said:

I spent the weekend driving around and putting my name on hangar waiting lists 8 years long... 

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I think that's how it is in most places.  Call back or visit every couple of weeks or a month.  Persistence pays.

[BlueSky247]

  On 5/28/2024 at 5:36 PM, Fly Boomer said:

I think that's how it is in most places.  Call back or visit every couple of weeks or a month.  Persistence pays.

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Thanks. I have heard, probably from here, that if you have a plane and are at the fbo often and buying their gas, sometime a hangar will magically become available. 

[hammdo]

Or you know a person who frequents the place and they help out a ‘friend’…

also, if you don’t have a plane when you’re put on the list, you seem to never move up.

-Don

[Hank]

  On 5/28/2024 at 5:42 PM, BlueSky247 said:

Thanks. I have heard, probably from here, that if you have a plane and are at the fbo often and buying their gas, sometime a hangar will magically become available. 

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It helps if you put your tail number on the receipt, and ask about the hangar while paying (if inside) or before leaving (if you pay at the pump).

[Shadrach]

I’ve not heard of any of this favoritism taking place at any of the airports I’ve been associated with. The FBO’s are tenants to the same landlords as the hangar tenants. The difference being that FBO is  paying a long-term lease and responsible for their own improvements and upkeep. Our local FBO has way bigger fish to fry than involving themselves in the politics/influence of the airport board.

We too have a long wait list. If you don’t possess or are not in the process of procuring a plane when you’re called, you don’t get a hangar. Similar situation at other fields I’m local to. Plenty of airport politics but don’t see it drifting into the waiting list.

Now, if we’re talking about who gets away with illegal sublets, that’s another story.

[Hank]

  On 5/28/2024 at 7:27 PM, Shadrach said:

if we’re talking about who gets away with illegal sublets, that’s another story.

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A hangar is a hangar, and all subleases are not illegal.

[GeeBee]

  On 5/28/2024 at 5:12 PM, BlueSky247 said:

Okay, I get it that these are considered luxury items and the underwriters need to properly mitigate risk. That doesn't keep some of the requirements from being a head scratcher.

 

It almost seems to me that when they want to know your liquidity and overall assets picture, you could just cash purchase the plane if you wanted to liquidate those assets. Yet people often walk in and finance six figure cars with nothing more than a credit check and signature. Not the same, I know - just seems really weird to me.

Hypothetically speaking - is this about what they are looking for? $100k plane, 20% down and something like 50% in liquid assets? They obviously want to make sure the first annual or any major expense isn't going to automatically render the plane abandoned. Am I understanding that right?

Maybe I'm just ranting.... I spent the weekend driving around and putting my name on hangar waiting lists 8 years long... 

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Airplanes are more mobile than cars, harder to locate and access in repossession. They also deteriorate into legally unmovable objects very quickly with big bucks to make them able to ferry. In short tougher to service the loan.

[Fly Boomer]

  On 5/28/2024 at 7:27 PM, Shadrach said:

I’ve not heard of any of this favoritism taking place at any of the airports I’ve been associated with. The FBO’s are tenants to the same landlords as the hangar tenants. The difference being that FBO is  paying a long-term lease and responsible for their own improvements and upkeep. Our local FBO has way bigger fish to fry than involving themselves in the politics/influence of the airport board.

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Every airport has its own power structure.  At many of the airports I'm familiar with, one or more FBOs have half the hangars rented for themselves, so it may not be in their best interest to help you.  If there is no FBO, it's all about who you know.

[NotarPilot]

What’s to keep someone from buying a well appointed airplane with Garmin GTNs, a G500, etc then parting out that plane (no serial numbers are reported stolen because it’s not), making a tidy profit, then defaulting on the loan?

[midlifeflyer]

One reason for banks looking harder at aircraft than car loans is the difficulty and increased cost of repossession and sale with airplanes. 

[Shadrach]

  On 5/28/2024 at 7:35 PM, Hank said:

A hangar is a hangar, and all subsets are not illegal.

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They are against policy at both of the fields local to me yet they are an open secret. It’s part of the reason the waiting lists move so slowly. Hangars that should be surrendered are “temporarily” filled while the lease holder looks for a new plane (for three years)…

[Shadrach]

  On 5/28/2024 at 7:58 PM, midlifeflyer said:

One reason for banks looking harder at aircraft than car loans is the difficulty and increased cost of repossession and sale with airplanes. 

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Exactly. You can wholesale a repossessed automobile in days if not hours.

[BlueSky247]

True story, the furthest away field from me charged a $50 non-refundable fee to be placed on their waiting list. They made very sure I understood about the non-refundable part. My home field? "Here, scribble your name and number on the bottom of that list on the bulletin board over there and we'll get you in the system."

[Shadrach]

  On 5/28/2024 at 7:58 PM, NotarPilot said:

What’s to keep someone from buying a well appointed airplane with Garmin GTNs, a G500, etc then parting out that plane (no serial numbers are reported stolen because it’s not), making a tidy profit, then defaulting on the loan?

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Not a lot of return for fraud and felony charges. Just a cascade of legal issues. Plus the buyers of the parts will have no legal claim to them as they did not belong to the seller. So perhaps additional lawsuits beyond the lender. 

[Igor_U]

  On 5/28/2024 at 8:19 PM, BlueSky247 said:

True story, the furthest away field from me charged a $50 non-refundable fee to be placed on their waiting list. They made very sure I understood about the non-refundable part. My home field? "Here, scribble your name and number on the bottom of that list on the bulletin board over there and we'll get you in the system."

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How long is the waiting list?

Not surprised, I've seen it around here when looking for hangar... they try to get only "serious" people by charging some money. IIRC, my home field did that but it was years ago.

True story: At the same time, I applied at KRNT as well. After 18 years, I still didn't get the call. Some 5 years into the wait I asked about the list and was told I advanced 2 spots to #50. 

[Hank]

I put myself on the hangar list as a student pilot, call it early 2007. A few months later, the nice guy I bought my C from rented me space in his box hangar. I moved back to Sweet Home in '14, bought my current home in '15, and I think they called me in '17 or '18 because I had reached the No. 1 spot. 

But a hangar almost 400 nm away does me no good, and I told them I did not want the hangar and to remove me from the list.

Oh, the airport had 12 rental hangars and six box hangars that the builders were given 20 years leases on, then extended to 30 years, at which point they are supposed to transfer to county ownership. Just realized the this should happen any day now, unless they beg for another extension. 

[Bolter]

  On 5/28/2024 at 10:26 PM, Igor_U said:

How long is the waiting list?

Not surprised, I've seen it around here when looking for hangar... they try to get only "serious" people by charging some money. IIRC, my home field did that but it was years ago.

True story: At the same time, I applied at KRNT as well. After 18 years, I still didn't get the call. Some 5 years into the wait I asked about the list and was told I advanced 2 spots to #50. 

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I am at PAE (like you) and I got the call from the waiting list after I was already in a private condo hangar for a few years.  So the list does move.  Everyone below me got an extra step when I turned down that hangar.  

If you do not have a hangar, PM me, and I will direct contact a hangar owner and see what is coming up in the East Condos.

-dan

[Igor_U]

  On 5/28/2024 at 10:54 PM, Bolter said:

I am at PAE (like you) and I got the call from the waiting list after I was already in a private condo hangar for a few years.  So the list does move.  Everyone below me got an extra step when I turned down that hangar.  

If you do not have a hangar, PM me, and I will direct contact a hangar owner and see what is coming up in the East Condos.

-dan

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Dan,

Thanks for the offer but I do have a hangar on a central ramp for over 15 years now. I think, at the time the wait was 3 years and at one point was almost zero (2009-10?). Now, I'm sure it's back to 2-3 years or more. But, it seems there's a decent turnaround at PAE, airport staff checks if you still own the plane and not having a cheap storage, and eventually force the tenants to leave if don't abide by rules. For all the years I have my hangar, most of the neighbors left or moved to a better spot so yes, the list is moving.

That doesn't seems it's happening at RNT or BFI, though...

cheers,

 

[midlifeflyer]

  On 5/28/2024 at 8:10 PM, Shadrach said:

They are against policy at both of the Stine’s local to me yet they are an open secret. It’s part of the reason the waiting lists move so slowly. Hangars that should be surrendered are “temporarily” filled while the lease holder looks for a new plane (for three years)…

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Yup. Not only policy, but violation of the terms of the lease. But enforcement can be spotty. 

[toto]

  On 5/28/2024 at 7:35 PM, Hank said:

A hangar is a hangar, and all subleases are not illegal.

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At my home field, all hangars are owned by the county, and they explicitly allow subleases up to six months in duration. The sublease is disclosed to the county and the county must be added to the sublessee’s insurance. It’s all on the up and up. 

I’m not sure if it’s possible to just keep renewing six month subleases, but it would be painful enough to discourage people from doing it long term. 

[Pinecone]

At my field, the hangars are owned by a separate company, but managed through the FBO (also owned by the airport owners).

Their answer is, when they get 10 people on the list for a T-hangar, they build a new row of T-hangars.

I had ZERO wait for the hangar for my Mooney.  And while I waited for a hangar for the CAP-10, the plane was not here yet, so there was effectively no wait.

As for crazy lending terms, I was quoted on the CAP-10 two percentage points extra because it is an aerobatic airplane.  HUH?  They are covered, as they require insurance to a value at or more than the loan amount.

[LANCECASPER]

  On 5/28/2024 at 5:12 PM, BlueSky247 said:

Okay, I get it that these are considered luxury items and the underwriters need to properly mitigate risk. That doesn't keep some of the requirements from being a head scratcher.

 

It almost seems to me that when they want to know your liquidity and overall assets picture, you could just cash purchase the plane if you wanted to liquidate those assets. Yet people often walk in and finance six figure cars with nothing more than a credit check and signature. Not the same, I know - just seems really weird to me.

Hypothetically speaking - is this about what they are looking for? $100k plane, 20% down and something like 50% in liquid assets? They obviously want to make sure the first annual or any major expense isn't going to automatically render the plane abandoned. Am I understanding that right?

Maybe I'm just ranting.... I spent the weekend driving around and putting my name on hangar waiting lists 8 years long... 

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People pay for their domicile first (mortgage or rent). Their car second and a lot of other things before their airplane.

Recreational vehicles and airplanes are the first items that people default on when things go South.

[Hank]

  On 5/30/2024 at 3:01 AM, LANCECASPER said:

Recreational vehicles and airplanes are the first items that people default on when things go South.

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Hey! When I went South from WV back to Alabam, I didn't default on nothin! Especially not on the Mooney!

Hey, wait, it was paid off before then . . . .

[Echo]

Interesting.  There was no such requirement regarding liquid asset availability when I purchased my first plane.  I wonder if there is concern about economy going south and the value deteriorating?  I was required to have full value hull insurance.  I was required to have a job/income.   Home loans are much more difficult to get as well.  Additional hoops to qualify.  Lenders don't want to repo your plane.  Especially if the actual value has gone down with a turn in the economy.