When financing an aircraft, the interest rate is one of the most significant factors affecting your monthly payment and the total cost of the loan. Aircraft loan rates are dynamic, influenced by the broader economy and your specific financial profile. Understanding what drives these rates is key to securing the best possible terms.

Fixed vs. Variable Rates: The Pros and Cons

Aircraft loans typically come in two flavors:

  • Fixed Rate: The interest rate is locked in for the entire loan term. This provides predictable, stable monthly payments, protecting you from market volatility. Most buyers prefer this option for budgeting certainty.
  • Variable Rate: The interest rate is tied to a benchmark index (like the Prime Rate) and can fluctuate over time. While it may start lower than a fixed rate, it carries the risk of increasing in the future. This can be an option for shorter-term loans or buyers who are comfortable with market risk.

Key Factors That Determine Your Interest Rate

Lenders evaluate several key factors to determine the specific rate they will offer you.

The Overall Economic Environment

Broad-market conditions, including federal interest rates and the overall health of the economy, set the baseline for all lending.

Your Personal Credit Profile

A strong credit history is paramount. Lenders look for high credit scores (typically 700+), a low debt-to-income ratio, and a consistent history of responsible credit management.

The Aircraft's Age and Value

Lenders view newer aircraft as less risky. A 5-year-old aircraft will almost always command a better interest rate than a 30-year-old aircraft, even if both are in excellent condition. The perceived residual value of the collateral matters.

Loan Amount and Down Payment

A larger down payment (20% or more) reduces the lender's risk and can often result in a more favorable rate. Similarly, very large or very small loan amounts may fall into different risk categories for lenders.

Don't Settle for the First Offer

As brokers, we make lenders compete for your business. This ensures you see the best rates and terms the market has to offer for your specific situation.

See Your Competitive Rate

How a Broker Helps You Secure the Best Rate

Navigating the world of aviation lenders can be time-consuming. Each has slightly different credit appetites and rate sheets. By using a broker like Jaken Aviation, you complete one application, and we leverage our network to find the lender whose programs best match your profile and desired aircraft. This competition and expertise often lead to securing a better rate than you could find on your own.