Tips For Financing Your Next Light Aircraft Purchase

As aviators, we know our profession – or even our hobby – is a costly one. Finding the next light aircraft for our business can be challenging; especially if we have our hearts set on buying something new. If you’re looking for a new light aircraft, here are some tips to help you get a better deal and avoid the many pitfalls along the way.

Defining The Purpose

You must decide what your aircraft's main "mission" will be and how you want to fly it most of the time. You cannot make any purchases with a turbine if you are merely doing joyrides with a companion or by yourself. Will you be travelling by plane? Is cargo aboard your aircraft necessary? How fast must your cruising rate be? Do you require IFR flight? Be aware of this and secure it first. You should look for a plane that satisfies 90% of your requirements.

Setting A Budget

Your budget should be rock-solid. Nothing should be purchased for more than the amount you can reasonably afford. Creating a long-term budget is also important. Even though you could be set on a single-prop, one-seater aircraft, the avionics, and engine may need to be completely replaced in a few years. Avoid being forced to keep a plane that is only a few years from needing an overhaul since that can require a bundle of cash in its own right.

Checking & Testing

If you are buying an aircraft second hand, you will need to check the logbooks, service schedule, and Time Between Overhauls (TBOs.) You should insist on pre-purchase inspections, logbook verifications, and reports with pictures. If sellers are reluctant to give you everything up front, walk away.

Getting The Right Finance

If you’re a private pilot and need to seek finance for your next light aircraft, there are many private lenders that can cater to your needs. But you would also need deep pockets to take care of maintenance, hangarage, fuel, and insurance. If you’re a commercial entity, you can take advantage of chattel mortgages and hire purchases. 

Using either option (a hire purchase means the plane is on the financier’s books, the chattel mortgage means it’s on your books) you can borrow 100% of the purchase price, or even more, allowing you to pay for extras like insurance progressively as well. You can also deduct depreciation and interest payments as well as the GST.

Always Get Impartial Advice

Get independent advice from an industry professional. Use an agent or broker who works for you – don’t just approach a salesperson and hope they do right by you. Insist on pre-purchase inspections by independent contractors and obtain clear titles on the airframe and engines. At this point, you should have your funding set in place so you can drive a harder bargain – and shows sellers that you’re ready to buy. Don’t get suckered into internet listings either. If they’re too good to be true, they usually are!