What Is Aircraft Financing? A Complete Guide for Buyers

For many aspiring owners, purchasing an aircraft is the culmination of a lifelong dream. However, the six- or seven-figure price tag can be daunting. That's where aircraft financing comes in. Simply put, aircraft financing is the process of securing a loan to purchase an airplane, helicopter, or other aviation asset.

Unlike a car loan or a standard mortgage, an aircraft loan is a specialized financial product designed for a unique, high-value, mobile asset. Understanding the fundamentals is the first step toward a smooth and successful acquisition.

Why Use Financing to Buy an Aircraft?

While paying cash might seem appealing, financing offers several strategic advantages:

• Preserve Capital: Financing allows you to keep your cash available for other investments, hangar costs, insurance, fuel, and maintenance.
• Acquire a Better Aircraft: A loan may enable you to purchase a newer, more capable, or better-equipped aircraft than you could with cash alone.
• Potential Tax Advantages: If the aircraft is used for business purposes, you may be able to deduct interest payments and depreciation. (Always consult with a tax professional.)

Types of Aircraft Loans

Nearly all aircraft loans are secured loans. This means the aircraft itself serves as collateral for the loan. If the borrower defaults on the payments, the lender has the right to repossess the aircraft. The terms are typically structured as asset-based loans with a specific term (the time you have to repay the loan) and an amortization schedule (the period over which payments are calculated).

Who Are the Key Players in a Financed Transaction?

A typical aircraft purchase involves several parties working together:

• The Buyer: That's you—the individual or business acquiring the aircraft.
• The Seller: The current owner of the aircraft.
• The Broker (like Jaken Aviation): An intermediary who connects the buyer with a network of lenders to find the most competitive loan terms. We act as your advocate and guide throughout the process.
• The Lender: The bank, credit union, or specialty finance company that provides the capital for the loan.
• The Escrow Agent: A neutral third party that handles the transfer of funds and title, ensuring a secure transaction for both buyer and seller.

A Smoother Path to Ownership

Aircraft financing may seem complex, but it's a well-established process. By understanding the basic components and working with an experienced broker, you can navigate the path to ownership with confidence. A good financing partner doesn't just find you a loan; they provide expert guidance to ensure your acquisition aligns with your financial and aviation goals.