Owning your own airplane is a dream of many pilots. Before you buy a plane, it is important to consider the full cost of ownership.
Airplane purchases are typically large investments. Beyond the sale price, there are ongoing costs of insurance, hangar/tie-down fees and regular maintenance. It is important to consider how you will use the airplane 90% of the time before making a purchase.
Determine Your Needs
Owning your own plane is a big deal. Not only is it a great way to travel, but it can also be seen as a status symbol. However, there are many things to consider before buying a plane. First and foremost, you need to do your research. Get on the Internet and read buyer and owner reviews, hang out at airports and talk to pilots who fly the planes you are interested in and even join airplane owner groups (like those for Cessna, Cirrus, Piper and Beechcraft).
Make a list of your wants and needs and compare it with your budget before you even start looking at aircraft. It is also important to ask the seller questions about the aircraft like accident and incident history, airframe and engine hours, maintenance records and whether it has avionics systems or de-icing equipment that add value to the aircraft. Also find out if there are any restrictions on the type of aircraft you can buy from your financing or insurance company that may limit your options.
Find a Lender
It’s important to find a lender that specializes in aircraft financing. Whether that is through membership in an aviation association or working with an aircraft finance broker, the lender should be familiar with FAA requirements. It’s also helpful to work with lenders who are familiar with the type of airplane you’re looking at buying.
Most brokers Flying spoke with recommend getting pre-approved before making the first call to arrange financing. That requires a thorough look at your personal finances, and, possibly, those of your business if the aircraft will be owned by a corporation.
Lenders typically want to see copies of the logbook and specifications of the airplane as well. And they want to know that the airplane is flyable (very few lenders lend on projects or wrecked aircraft). They may also require a title search and possibly an escrow account. You’ll need aviation insurance, too. Some lenders offer asset-based loans, which allow the buyer to buy an aircraft without having to make financial disclosures or sign a personal guaranty.
Make the Offer
Most people consider buying a house and a car the two biggest purchases in their lives. Purchasing an airplane certainly ranks up there as well.
Airplanes are expensive investments and you should only buy one that will meet all your needs. Getting the right plane can save you from costly mistakes in the future.
Ideally, you’ll be able to pay for an aircraft with cash but not everyone has that luxury. If you need to get a loan, shop around and make sure you get the best interest rate and terms.
It’s also a good idea to have a pre-approval letter from a lender to show you’re serious about the purchase. This will help speed up the closing process. Also, it will help ensure that you aren’t approved for a loan that is too large for your budget. This could lead to buyer’s remorse down the road. Also, if you’re buying a plane, you’ll likely need to rent a hangar space or pay tie-down fees.