Purchasing process
Turbine aircraft have different requirements
The process will begin the same with AOPA Finance collecting the initial application package. We’ll do the initial review and make sure you meet the requirements for our lenders. We’ll then identify the best lending option before introducing you to the lender for final approval.
The lender will require escrow; a satisfactory prepurchase inspection, done by a certified A&P, assessing the condition of the aircraft; and proof of sufficient and adequate insurance in place for the aircraft.
In the turbine market, it is common for lenders to require an earnest money deposit. Often with larger purchases, the lender’s due diligence includes additional work, like an on-site appraisal, custom loan contract preparation, and more. Because of the time and expense involved, lenders are unwilling to incur these extra costs without assurance they will be covered. Many aircraft owners may be unfamiliar with the Cape Town Convention and Protocol (CTCP), established in 2001 to reduce creditor risk and lower borrowing costs by improving legal certainty. The International Registry tracks ownership, registration, and legal or financial details for high-value, long-range aircraft.
The criteria for an aircraft to be listed on the CTCP include holding at least eight people, including crew; for jets, engines having at least 1,750 pounds of thrust; and for turboprops or pistons, engines having at least 550 rated takeoff horsepower.
If the aircraft meets the criteria, lenders will typically require it to be registered for you to receive financing. Most aviation escrow companies can register aircraft and engines with the FAA and the International Registry as part of the closing process. Plan on some added time and cost.
Turbine aircraft often have multiple complex systems critical to the aircraft’s airworthiness and operation. A prepurchase inspection on turbine aircraft should include reviewing these systems and their maintenance history and service schedules. Compared to piston engine overhaul times of 1,400 to 2,000 hours, a turbine engine typically has an overhaul time of 3,500 to 5,400 hours. Turbine engines also have additional in-between inspections, known as phase inspections. Depending upon the aircraft, there can be four to six, in addition to standard hot section inspections. A thorough prepurchase inspection will outline when the last hot section inspection was done and which phase the aircraft is in currently. It should also stipulate what other inspections are coming due soon.
Lenders often require documentation on who will manage the aircraft, who will fly the aircraft, and how both will be supervised. This is especially true if you’re new to jet ownership and not qualified to fly the aircraft. The lender needs to feel comfortable that their collateral is going to be operated and managed by qualified people before committing to a loan of turboprop and jet proportions.
There’s also a significant difference in insurance on turbine aircraft, especially if your missions include crossing international borders. Not only will you need to have appropriate insurance in place for these locations, but you will also want to make the lender aware that international travel is part of your plans.
The last important difference is how long the loan takes to process. Part of that is due to compliance with the CTCP international registry and part has to do with the size of the loan. For some lenders, when a loan hits a certain dollar amount, it requires more signatures. Assembling the bank signatories can take some time. So, when it comes to timing, the earlier you start on the financing, the better off you’ll be. 
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