How To Finance A Personal Aircraft

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Can you finance the purchase of an airplane? the simple answer is yes. Financing an aircraft is possible. Financing an experimental aircraft is also possible. They just may have a different loan process.
To finance a complete airplane, you simply find a good lender and depending on your income and credit, the lender can borrow you up to 80% of the purchase price, with you putting down the other 20%. Interest rate on the loan will depend on the amount being borrowed, term of the loan and how good your credit is. Keep in mind that you’ll also be required to submit at least 2 years tax returns and income statements.
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To finance an experimental airplane, the process is a bit different. One option is to get a line of credit agains and asset that you already own. Use the line of credit to fund the purchase of the kit and build of the airplane. Then once you have a complete airplane, you now go to a lender to refinance. Again the lender will borrow you up to 80% of the value of the plane. Once you pull that money out, you can go ahead and pay off your line of credit that you initially borrowed.
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Опубликовано:

15 янв 2020

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Комментарии : 108

@antoniobranch 3 года назад

I've been a airplane (PA-24) owner for ten+years. I recommend anyone looking to buy a aircraft (airplane) do your research concerning your purpose for ownership. 1)Do you want to fly across the country for adventure and/or business. 2)Do you want to build time and get your certification(s). You have to be "MAD" (motivated and dedicated) about flying if your going to stay with it, especially for the long term. Aircraft ownership can be "HELL" on the ground, but "HEAVEN" in the air.

@DavidJonathan10 4 года назад

Great content Mike. Love this. When I'm about to start mine i'll definitely reach out

@dbhyslop 4 года назад

The downside to using a HELOC to fund a kit plane of course is they can take your house if something happens and you can't make payments. Many kits depreciate after purchase so if you lose your job or have some other financial emergency it’s possible you won't be able to sell it for what you owe.

@jrwarner579 4 года назад

Gr8 Advice ,Bro...Hope to see some building of the new plane soon!!

@gregoryhill5222 4 года назад

Your videos are clear and informative my friend thanks friend. 👍

@KFitzG35competitor 3 года назад

Thank you for this information! Great video

@Darksagan 4 года назад

Thanks for the info.

@alexandrenazario7857 4 года назад

Good Boy...Fantastic Mike..

@raymonddunn9723 4 года назад

Buying an airplane is nothing like buying a car. My first plane was a Piper Cherokee. I paid $50000 cash for it. Home free. Right. Wrong. My first annual inspection was $10000. Add hangar rental fuel and oil and insurance. Total first year cost if operation was about $15000 or 30 percent of the cost if the plane. And it was not a hangar queen. Fortunately my annual operating costs dropped down to about $3000 per year afterwards. But my hangar rental was only $1200 per year. A really good deal. If you cannot afford surprises don't buy an airplane. Especially a certified plane that costs a fortune to maintain. Like $500 batteries and $100 per hour A & P. Go the experimental or ultralight route. Far more fun for the buck. And far less wolves to fleece your bank account. PS I have owned 5 certified aircraft including a twin. So been there done that. My next aircraft will be lsa or experimental. No more certified money pits.

@Alaskan4Life59 2 года назад

Didn't know about your real estate channel. You're an impressive individual. Thanks for this video, great information.

@torianoevans Год назад

Really Great Info!! I always wondered how that could work. Thanks

@migVs 8 месяцев назад

Thank you for this information my friend

@louwade2654 4 года назад

Great advice, I have been looking on AOPA, but I didn’t think about the line of credit for the Sling or Vans which is what I am looking at.

@ronaldboodram8563 3 года назад

Thank you I enjoy your channel

@alanaspurling6469 4 года назад

I used a loan from my retirement account. I used some of the cast to pay down my credit cards, and the remaining to purchase my airplane. I own it outright without any leans or other title issues, and my interest rate is well below prime.

@russnurse2b807 4 года назад

It's great you were able to get a plane but make sure you pay the retirement loan back with extra interest otherwise you are seriously hurting your retirement.

@Truthofstillness 3 месяца назад

Smart move. 💯

@DNModels 4 года назад

Probably it will be best if you can make series about options available for purchasing different aircraft.

@michaelhille261 4 года назад

Great content Mike 👍🏻

@BLAMBERRY 4 года назад

What a guy, I asked and you answered! Thanks man

@onfin3al6 4 года назад

My first thought was the Hyper-Bype , years later I seen the Prescott Pusher , That I really liked .

@JabariHunt Год назад

Great video as usual

@stuntnation23 4 года назад

Good information

@EdwardTilley 2 года назад

Makes sense ... helpful

@Dan007UT 4 года назад

Some calculations I've done (with probably some decent error) show that buying a cheap 20-30K airplane ends up being cheaper than renting after about 12-14 years. This was based off of ~$100/hr rental @ 30 hours a year. I also found that some flight clubs were the most expensive way to fly. Some charge $3000-5000 up front, then monthly fees of $100 a mo, and then hourly rental rates of $60-90/hr **this varies a lot depending on flight clubs but that's the average in my area.

@arturosincere483 2 года назад

You all prolly dont give a shit but does anybody know a trick to log back into an Instagram account..? I was stupid forgot the password. I appreciate any tips you can offer me.

@sgoell75 4 года назад

I WANT MY P38 Lighting I would love to own and fly it awesome to the max!

@btmountaineer93 4 года назад

Mike, thank you. This answered a lot of questions I had. When are you going to do some flying up here in Alaska? You should come up here . It’s the Mecca of aviation.

@MrNopehaha 4 года назад

Teh easiest way is to build a huge yt audience, ask them to help out, ????, Profit!

@Workstupidyoutub1000 4 года назад

Avoiding debt is always better IMO, but you do you.

@Superxpninja 4 года назад

You gonna pay cash?😂

@oneskydog4401 4 года назад

Paid cash for my 1960 PA 22-150 Tri-Pacer and it will hold its value.

@homertalk 4 года назад

I'm going to Big Joe's House of Discount Airplanes for all my purchases. He'll finance anyone. He requires you pay for a life insurance policy up-front payable to Big Joe.

@ibgarrett 4 года назад

@@Superxpninja I paid cash for my 1/3 share of a Cessna T210...

@Workstupidyoutub1000 4 года назад

Cbeddoe19, I like the saving part. Getting a loan instead of paying it off isn’t what I would do. Sometimes investments go down. Then you are paying on loan interest and losing on the investment. If getting a loan to invest was smart, then the big finance companies would do that instead of loaning out money. Just a thought.

@Jahspecs1 4 года назад

Great video, personally I prefer to create the income and then buy the plane in cash

@SwertPertoto 2 года назад

great vid! at 10:20 the guy yanks the rudder straight. ouch

@bowhuntinoh 4 года назад

I bought into a flight club. We own two aircraft and hangers.

@sirclarencedarrow 4 года назад

Nice video, but not necessarily applicable in the all details to Europe and/or ultralights. I am currently looking for a used Trike (preferably an Air Creation Skypper) to replace my Cosmos.

@shamimahmed4980 4 года назад

Great Advice. If you understand F&I then you should know what he is talking about.

@marioramos5576 3 года назад

Is common for the bank to ask for the “bill of sale” from the owner before wiring the funds to the seller?

@wegodowntogether 4 года назад

great

@johnbilliot1484 4 года назад

Excellent advice. I'll be visiting this video again once I get my Private Pilot Certificate

@lucaslinn7777 3 года назад

looks like you made it?

@JTGmartin 4 года назад

Hi Mike for your sling build have considered the Aero momentum engine? Looks like substantial savings over the rotax. Les money to finance over all.

@mojogrip 4 года назад

I know but the Rotax 915 is one of the reasons why I chose to build a TSi. It's arguably one of the most technologically advanced piston engines in civil aviation.

@Capiche35 4 года назад

Love your videos but don’t agree with financing a quickly depreciating new airplane. Best to buy older plane that is mostly depreciated around $30-40k and move up in plane every 5 years.

@stealhty1 4 года назад

Still a bit hard for me to understand,I remember one thing they ask is : what is it for ? Like when I purchase my Motorcycle. an Airplane is also considered a Luxury item for the lender,,,,bottom line If you not going to fly at least 20-30 hrs a year best choice is to stay in your flight school club

@nateb19 4 года назад

At the end of the day it’s an expensive toy. I love toys but can’t make them be too big a part of your financial world. If they are , then in my opinion you are doing it wrong.

@kymanidunkley4311 2 года назад

Hey Mike .. I have a few question. Say I purchased a airplane, what is the waiting time for me to resell that airplane? On the resale can I get more than what I bought the plane for? does plane has Moto trend like car does what type of plane holds the best value

@ksmoothe 4 года назад

You did a video a couple years ago, where you talk about the different types of planes, and you mentioned some where available for 30K. Are there cost associated with keeping an airplane at an airfield? Insurance? I'm in San Diego. I know you did some flight training in socal, where?

@mojogrip 4 года назад

$30,000 just to buy the plane. Now assuming you were financing that purchase, you could budget $1000 - $1300 a month for everything including insurance, hangar maintenance etc, 7-10 hours flying per month.

@Studio6A 4 года назад

I don't see a problem in financing an airplane through a business with limited liability. But in many cases it is a no-go to finance a hobby as this can end very badly.

@tomwilliams2845 4 года назад

Thanks Mojogrip for that video. I myself have been wondering if I can afford an RV 10 build? Do you think there’s a number that you can come up with that a bank would require total income amount to afford something in the 130,000-150,000 range?

@mojogrip 4 года назад

No particular number, but the bank will make sure you can afford 20% downpayment and also monthly payments to satisfy the loan.

@EmpireOfRealEstate 3 года назад

What loan terms have you seen for used aircraft?

@carpediem6568 4 года назад

Always enjoy your work Mike. But seriously, the fact that you are asking for contributions to build your Sling, tells us that owning a nice plane with a parachute is not possible. Sad but true.

@geromegoreseb957 4 года назад

Can non US citizens also finance via aopa?

@calinutza33 4 года назад

Don’t lose your house ! You can not sleep in a small airplane ! 😂

@Brettdyt Год назад

You sound exactly like Rich Rebuilds, LOL

@kenthigginbotham2754 3 года назад

GRATEFUL !

@chuckwashington6663 4 года назад

Hey Mike, what about insurance on this type of airplane? When I bought my twin Piper about 25 years ago the insurance policy was also an expense to be considered. What kind of insurance are you going to carry?

@mojogrip 4 года назад

I've been quoted for about $3,200/yr. Once I add my instrument rating and build more hours, I expect the premium to be lower.

@ctsteve1967 4 года назад

@@mojogrip not really and if it does it will be no much.

@RevGunn-jq3cq 4 года назад

Buying a plane is not a problem, the issue is once you own it !!! I could not find reasonably priced hanger space with in a reasonable distance from house

@mojogrip 4 года назад

Well that depends on where you are. This is true though in a lot of metro areas. I'm in the same predicament, currently on a waiting list.

@RevGunn-jq3cq 4 года назад

MojoGrip you are right about that! I live in Nashville and was on a waiting list 50 miles away. The airport was planning on 4 new hangers which never happened. Now that I’m retired I’m planning on selling my house and moving to the country and buying a light sport plane....great channel

@aickoyvesschumann3400 2 года назад

When you anyway use a HELOC to finance your complete build why would you then take out an airplane loan? Your HELOC has a much lower interest rate, i.e. just pay that one off as you keep flying. When the prime rate changes, reevaluate.

@robhaynes6173 4 года назад

Mike, do you have any info on financing a fraction of an airplane with 1 or 2 partners? I’ve been considering this and wondering if the banks will finance half or a third of a $300,000 airplane.

@mojogrip 4 года назад

If the plane is built and readily available, this may be possible.

@wms1650 4 года назад

@@mojogrip If a 1/3rd owner wants to borrow for the purchase of the airplane he will need to secure the loan using his assets. If he wants to use his portion of aircraft for collateral the lender will want the aircraft title. The other owners will have to agree. I don't think they will agree. The downside of partial ownership.

@WeTubeIn90210 3 года назад

Good conversation, Mike. I will definitely look into using my home equity line of credit (HELOC). The only thing I question is: Why go back and use a conventional loan if I’m using my HELOC? The rate is most likely better than a conventional loan and I can “write off” the interest

@anthoniaberry6241 2 года назад

I have that same question. Mike can you expand on that?

@zendorea 2 года назад

@@anthoniaberry6241 I think the thought process here is risk management. By refinancing and using the plane as the asset to which the lean is on, you do not risk your house. However, as you stated, refinancing a loan on the asset of the aircraft alone will give you a worst rate for sure.

@berniemccann8935 4 года назад

"How To Finance A Personal Aircraft" -- Simple; Produce RU-vid videos ! 🤣

@flexairz 4 года назад

How to finance? Do as Mike does!

@12Skidoo 4 года назад

I gave it 666 likes Great video by the way

@anbooba 4 года назад

Great tips and a great video as usual! Quick nite: 80% od 200k is 160k not 240k :)

@AnalyticalMind 4 года назад

I’m pretty sure he was using 300K in his example

@nateb19 4 года назад

Idk Mike’s financial situation but it sounds like he is highly leveraged in both real estate and his TSi. Be careful with this approach. All it takes is a string of bad luck and things can go south fast.

@tomwolf8721 4 года назад

However, Mike does say eliminate the previous step, or loan to continue. So in the end his plane is the collateral. If he follows this pattern as his debt increase to the final product, only the final product will be collateral. This isn't a mafia loan. I didn't think a Sling Tsi was $300,000 no matter what equipment. That does put another light on building an airplane. Of course this could be the bank's value and 80% would be $240,000 closer to the actual cost of a loaded Tsi. So the bank gets 20% or $60,000.00 by one method or another and secured the loan. Either way Mike's home is no longer directly involved.

@nateb19 4 года назад

Tom Wolf fair enough. But still mike has to get the plane built. Illness, job loss, family emergency, fall of in RU-vid revenue could put him in a cash crunch fast. If the plane isn’t built by then then his home is still at risk . Too risky for my blood. I’d rather own a cheap plane, save and invest and buy/build the Sling TSi when I’m wealthier. Id probably still finance it but wouldnt be nearly as leveraged. I feel like he’s putting the cart before the horse here.

@wesleypowell9907 4 года назад

If you finance anything, it’s not an asset till it’s paid for.

@remotecontrolcentral4928 4 года назад

Or you could slowly save up and pay cash for it

@waqarsyed6641 4 года назад

Mike...

@hottrizzle 2 года назад

I guess I'll jus pay cash 💲 when I hit the lottery 🤷

@NoelyBob 4 года назад

CASH

@MrZrryan2 4 года назад

I disagree; buy what you can afford, stop dreaming, start flying. A 30K old & ugly trainer will bring you as much (or more) fun than a big dollar sexy beast. You can borrow 30K almost anywhere (think personal line of credit) at reasonable rates. Also, cheap airplanes cost a LOT less to insure, and since they already ugly, you don't need a hangar!

@algeriasolitaryman3662 3 года назад

✌✌✌🇩🇿🇩🇿🇩🇿

@AsH-fp3fx 4 года назад

Lol, line of credit for to 60K then you get a loan of 240K to payback the 60K then keep monthly payments for 180K. What the hell is wrong with your numbers? Why not just pay down the 60K

@fisherrj99able 4 года назад

My thoughts exactly, why take out the 300k refi to begin with if line of credit has same interest rate.. other than needing the money to pay for something else. Then if all hell breaks loose and you can't pay, the bank only has one asset to come after, the house with equity line vs refi the plane and now the primary mortgage and plane loan can be repossessed.

@AsH-fp3fx 4 года назад

Yeah it does not make any financial sense. He always has some interesting advices on his channel. SMH

@wishicouldspel 4 года назад

If your not paying for all your plane dreams with all cash make sure you keep my name and number for the day your cash runs short for one reason or another. We buy discounted dreams all the time. Ussualy aroubd 50 cents on the dollar. Sickness, divorce , and life in general make unwise purchases made without 100% cash turn into the best thing the patient guy with cash could ever wish for.

@ctsteve1967 4 года назад

Put me on THAT list. dynotime1@yahoo.com same deal Cash

@stevefisher2553 4 года назад

First

@joeymartinn1 3 года назад

Oh boy... how about not tying your house to your hobby. That’s the dummest idea ever. Let the bank get the plane and not your house. If you have to put up your house, wait and save.