Finance: Co-ownership vs. fractional

Co-ownership is frequently what people mean when asking about fractional ownership. If you are looking to purchase an aircraft with multiple partners, this is more commonly regarded as a partnership loan. There are a lot more financing options for co-ownership than for fractional ownership. Lenders are comfortable financing partnerships with up to four members using standard loan structures amortized up to 20 years. Beyond four members, lenders will typically find comfort only if the partnership is operating as a flying club. AOPA Finance has flying club options as well; those typically require a larger down payment and a shorter amortization.

Fractional ownership, where you own a “share” in an aircraft flown and maintained by a fractional management provider, such NetJets or PlaneSense, has few financing options. The reason for this is that lenders are rarely able to fully secure their collateral interest in these loans. Also making things challenging is the fact they must assess your personal financial situation as well as the financial health of the fractional operator.

Some options are available for the strongest fractional providers; however, financing is limited and you can expect terms of no more than five years. As an aside, if you anticipate flying more than 25 hours annually, fractional ownership can be a cost-effective way to gain access to larger aircraft.

AOPA Aviation Finance can help when you are buying an airplane. Call 800-62-PLANE (75263) or go online to request a quote.