Finance: Not so simple

Airplane loans take a day or two to approve, and sometimes longer. That’s because the underwriting process for an airplane loan is more like that for a house than for a car. Lots of documentation needs to be collected and presented: photos, logbook entries, personal financial statements, tax returns, IDs, and more. That’s in addition to signing a promissory note, security agreement, and other legal documents.

However, one of the most time-consuming issues can be verifying a clean title. It would be rare to finance a 30-year-old car, but financing a 30-year-old airplane is an everyday occurrence. The airplane’s history needs to be thoroughly examined. Complicating matters further, clearing up issues arising from an improperly executed lien release sometimes can take weeks.

On a positive note, because the registration process is centralized in Oklahoma City, Oklahoma, there’s only one place to check. Also, now that the FAA is willing to accept electronically executed documents, the process is becoming easier. Many banks and other lending institutions are slower in accepting electronic signatures, but that will speed up the process further.

Probably the biggest reason the process of obtaining an aircraft loan is slower is aircraft lenders are not collateral lenders—they are cash-flow and collateral lenders. Most automobile lenders can rely heavily on the collateral of the car because they have greater confidence in the resale value in the event they must repossess the asset. Forecasting the resale value of an aircraft is more challenging. Factors such as the condition or total number of hours on the engine can significantly affect value.

Email [email protected]

aopafinance.com
800-62-PLANE (75263)