What Are the Requirements for an Aircraft Loan?

Securing an aircraft loan is a detailed but straightforward process. Lenders evaluate two main areas: the borrower's financial health and the quality of the aircraft itself. Understanding these key aircraft loan requirements will help you prepare a strong application.

Borrower Requirements

Lenders need to be confident in your ability to repay the loan. They assess:

• Credit Score: A strong personal credit score is crucial. While specifics vary, a score of 700 or higher is typically required, with the best rates reserved for scores of 740+.
• Liquidity and Net Worth: Lenders want to see that you have sufficient cash reserves (liquidity) and a healthy overall net worth. This demonstrates your ability to handle unexpected expenses.
• Debt-to-Income (DTI) Ratio: This compares your monthly debt payments to your monthly income. Lenders use it to gauge your ability to manage another monthly payment.
• Pilot Experience: While not always a strict financial requirement, having a pilot certificate and experience appropriate for the aircraft you're buying gives lenders additional confidence.

Aircraft Requirements

The aircraft serves as collateral, so lenders scrutinize it carefully:

• Age and Condition: Newer aircraft generally receive better terms. For older aircraft, lenders will look for excellent maintenance records and a clean bill of health from a pre-buy inspection.
• Appraisal: An independent desktop or full physical appraisal is required to establish the aircraft's fair market value. The loan amount will be based on a percentage of this value.
• Clean Title: A title search is performed to ensure there are no existing liens or claims on the aircraft.

Required Documentation

To verify the requirements above, be prepared to provide a standard set of documents, including personal and/or business tax returns, a personal financial statement, aircraft specifications, and a signed purchase agreement. A complete and organized package is the key to a swift approval.