Tomo Posted February 8, 2012 Posted February 8, 2012 I hope to get my own aircraft in the near future, and obviously the only way to do that would be with the help of a finance company. So I thought it would be interesting to hear from others what company they use, and how have you found them? Thanks!
Kyle Communications Posted February 8, 2012 Posted February 8, 2012 I suppose Tomo it depends on how much you need to borrow...if you have a credit rating at all.....have you ever borrowed money from a bank etc and paid it back?.... also if you did get the bucks you would need to have insurance I would expect for the loan etc especially being a aircraft so I think you need to look into it a fair bit especially due to you being a youngin not an old fart like most of us on here. What sort of aircraft did you have in mind? Mark
XP503 Posted February 8, 2012 Posted February 8, 2012 WOOHOO Tomo!!!!!!!!!!!!!!! Even though I told you in another thread to get your cpl - it would be soooo cool to have another young guy with their own aeroplane. I went to my bank, asked for some money and they gave it to me. HAHA ok so there was paper work referees and blah blah but its doable. WHAT TYPES ARE YOU LOOKING AT TOMO!!!!!!!!!!!!! It rained today so I changed the plugs, cleaned the fuel filter, degreased the 503 and painted the exhaust pot black, filled a chip on the prop and filed it back, checked the tension on nearly every bolt on the airframe, retouched the paint here and there, fitted a neat little storage bag behind my seat, straightened the tailwheel spring and painted it chrome. Then the rain stopped and I coudn't resist so I went for a buzz to make sure it still flew (and it did - better actually) Tomo my biggest advice is take someone with you when you inspect, I went alone and bought it, then paid over $800 for Wayne Fisher to do the condition report. SO EXCITED FOR YA TOMO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2
Tomo Posted February 8, 2012 Author Posted February 8, 2012 Thanks HH and Mark I've got a house loan, so I guess I've loaned before, though it's not paid off yet so I'm not sure if it would be classed as credit rating or not. Mind you I will look into it 'in depth' when it's time, but just putting it out there to get the mind ticking first. Not sure what aircraft yet... Thanks David!! I'm just prodding the air at the moment, getting a taste of what's out there... and what's involved! (more on the money lending side, as I'm fairly up to scratch on aircraft maintenance and conditions etc...)
Guest Andys@coffs Posted February 8, 2012 Posted February 8, 2012 Tomo, what equity in the home? Housing loans are relatively cheap money compared to other things, Line of credit maybe? You can set one of those up and the bank could care less what you use the money for as they have the equity in the house to call on if needed and the repayment amount and regularity is up to you to determine within reason. that said your young so probably havent had the loan for all that long and therefore probably dont have a huge build up of equity, unless your deposit was well above the normal asking percentage Andy P.S Owning a plane makes all the sense in the world...except financially. When looking at that aspect in isolation owning a plane is just a plane dumb idea.....but screw sensibility....we're aviators!!
XP503 Posted February 8, 2012 Posted February 8, 2012 Yea that's a good idea definitely test the waters first before you commit. Especially if it's a newer model or non proven design. Oh and I know your more than capable re: a/c maintenance etc... I was simply rambling about all my accomplishments today, just pointing out how great it is to be able to tinker with your own toy at your own leisure. You could definitely teach me a lot about a/c maintenance, I spend most of my time calling Wayne or Richard Eacott (heeelllp haha) I bet theyre sick of my calls.....hahha pretty cool stuff tomo!!!!!! 1
Guest Howard Hughes Posted February 8, 2012 Posted February 8, 2012 5 years < 900 pm 25k balloon Out of interest, what type of aircraft? The one in your avatar? Housing loans are relatively cheap money compared to other things, Line of credit maybe? If using this method be careful and do your sums, or it can work out costing you more. Compounding interest is a B17c#!
Camel Posted February 8, 2012 Posted February 8, 2012 Tomo, not a finance Guru but have owned five aircraft and 6 properties, currently two of each. Work out how much you want see if you can get it as part of your home loan, that is increase it or even an equity loan say like a varidian like commonwealth do and once you got the money then try pay it off to get it to a manageable level, don't try take out more than one loan, the ideal is put it on the mortgage, houses a worth what you pay for them today but worth heaps in time to come so no need to hurry to pay it off but get it down to a point where if interest rates went up it would not hurt as much. My second aircraft was bought after selling an investment property and paid out most but kept enough for the C172. My personal opinion is try keep in all on your home loan mortgage if you can't get a equity loan then get rid of it quick. Hope this helps you. 1
naremman Posted February 8, 2012 Posted February 8, 2012 If you walk into a bank and say that you want money for a private aircraft you are probably going to struggle Tomo. A business connection or draw down on a housing loan might help. I purchased my Airtourer in 1975 for $3500 through the farm, and it was great to get me to 500 hours PDQ, taught me heaps, and despite my ineptitude treated me kindly. It actually cost me less than a new Kingswood ute!! I had the intntion of keeping it for a few years and then moving on. I still have it 37 years later. Good luck exploring the possibilities Tomo. 1
Guest Andys@coffs Posted February 8, 2012 Posted February 8, 2012 If using this method be careful and do your sums, or it can work out costing you more. Compounding interest is a B17c#! My recommendation is to learn how to drive excel, or a financial calculator and understand how these loans work. At the end of the day, in cold hard terms home loans are for the majority of us the cheapest money we will ever loan. If you dont understand how they work, and pay less than you should then yes, like every loan, you'll pay a fortune, or to put it another way, never borrow more than you can pay if the worst thing you can think of were to happen. At the same time, always remeber that there is no rewind button in life and you must answer the question will I regret not doing this in latter life, or will I be around to regret it in later life. For me, it was the last two factors that made me put aside all of the sensible determinations that no matter how I looked at it gave me a red light and went ahead anyway. Dont forget insurance costs, these may verywell be the largest single aviation cost per yearand when, if using housing finance, it may take you 20+years to pay for, best that it be around for that 20years.....Also understand that the first 2-3years with insurance you'll pay a new boys premium. Andy
Guest Howard Hughes Posted February 8, 2012 Posted February 8, 2012 Also understand that the first 2-3years with insurance you'll pay a new boys premium. Does flying experience count for anything? Or is it the fact that you are a 'newbie' owner?
Guest Andys@coffs Posted February 8, 2012 Posted February 8, 2012 Does flying experience count for anything? Or is it the fact that you are a 'newbie' owner? I cant tell, I just know in my circumstances coming in with around 300hrs the first yrs premium was around 4.5k and decreased down to around 3.1k over time, I guess its like a no claim bonus with cars. Also insurance is effectively "agreed value" and doesnt necessarily represent what you paid for the aircraft rather what you want handed to you (minus excess) in the event of a right off. It could be more or less than current value of your steed as you need and agree with the insurance broker. I believe total hours does have a major determinant on annual premium, but its not the only determinant.....but definately one that is advantageous........ Andy
fly_tornado Posted February 8, 2012 Posted February 8, 2012 Don't forget to factor in a rate rise when you borrow, there seems to be a lot of pressure on the banks to jack up repayments to keep their profits up.
Guest Andys@coffs Posted February 8, 2012 Posted February 8, 2012 Don't forget to factor in a rate rise when you borrow, there seems to be a lot of pressure on the banks to jack up repayments to keep their profits up. Yep....except Id be more conservative than "a" rate rise, Id see what it looked like if we were paying 2-3% above todays rates, and perhaps more if you were paying morgage rates in the late 80's early 90's and can remeber 17% being the going rate at that time.....I'd like to think we wont revist that level again, but with the whole greece and europe thing WhoTF knows what will happen..... and a fatalistic party of me says, if the worst happens and I end up a bankrupt through the actions of some pinhead in europe then does it really matter if Im a bankrupt with the debts of a house only, or a bankrupt with the debts of house and plane......outcome is still the same Andy
68volksy Posted February 8, 2012 Posted February 8, 2012 One thing we found with the finance companies that take the aircraft as security was the extra insurance requirements they have. Whilst it's generally accepted in the industry that $1mill public liability per seat is adequate, the finance company was asking for $10mill minimum. Put the annual costs of the finance up substantially. As the aircraft was being cross-hired to a flying school we were able to obtain a simple business loan using the equity in a house as security. Cross-hire makes good sense tax-wise if you're after deductions also - the government will pay up to 48.5% of the costs of running the aircraft!
pudestcon Posted February 8, 2012 Posted February 8, 2012 Yep....except Id be more conservative than "a" rate rise, Id see what it looked like if we were paying 2-3% above todays rates, and perhaps more if you were paying morgage rates in the late 80's early 90's and can remeber 17% being the going rate at that time.....I'd like to think we wont revist that level again, but with the whole greece and europe thing WhoTF knows what will happen..... and a fatalistic party of me says, if the worst happens and I end up a bankrupt through the actions of some pinhead in europe then does it really matter if Im a bankrupt with the debts of a house only, or a bankrupt with the debts of house and plane......outcome is still the sameAndy Don't forget you can always take out a loan with a fixed interest rate if you are worried about what interest rates will do - just remember you will pay through the nose if you ever need to break the fixed rate loan. Pud
Guest SAJabiruflyer Posted February 9, 2012 Posted February 9, 2012 Tomo - I believe if you really want to finance a plane - try to make it tax effective. Talk to a good accountant, get their advice on what you can and cant do. Register a business if need be - whatever you need to do to make it work for you. And let's not forget the words of a very smart businessman Kerry Packer "When asked about his company's tax minimisation schemes, he replied: "Of course I am minimising my tax. And if anybody in this country doesn't minimise their tax, they want their heads read, because as a government, I can tell you you're not spending it that well that we should be donating extra!"
Tomo Posted February 10, 2012 Author Posted February 10, 2012 Thanks guys, really good replies, and advice. Keep it coming! If I can add to my home loan that would be cool, but I don't think I've had the loan long enough... would be only 4-5months or so, although paying it off at around 4 times the rate at this stage.
Mark11 Posted February 10, 2012 Posted February 10, 2012 Well like everything I do, my wife says save up money first... Pay the credit cards off, buy me a new kitchen an pay off 25% of the house before you even think of buying anything (else)... 1
Tomo Posted February 10, 2012 Author Posted February 10, 2012 Well like everything I do, my wife says save up money first... ...pay off 25% of the house before you even think of buying anything (else)... I don't have a wife, but that sounds about the same as my Mum...
bones Posted February 10, 2012 Posted February 10, 2012 Personally, and yep i probably get stoned to death for this but, if you need to finance a toy(airplane, dirt bike, and the likes) i believe you cant afford it. But that just me i guess, how ever i do own my home, 2 cars and a hangar, 2 gyros, a few other toys, and a business, and the only thing i owe money on is the business. all from my sweat and tears, but in saying that i sometimes think of some of the places i always wanted to go, but was too busy making money to pay for all the stuff i now own. 1
dazza 38 Posted February 10, 2012 Posted February 10, 2012 The way I see it is that your dead for along time. I dont want to get to 70 odd and look back and say 'I wished I did this or did that. 2
fly_tornado Posted February 10, 2012 Posted February 10, 2012 They way I see it, it can't hurt to shop around. See what people are prepared to loan and what its going to cost to repay that loan. 1
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