Thinking about buying an aircraft but wondering how much you’ll need for a down payment? It’s a big question for any aviation enthusiast ready to take flight! In this blog, we’ll break down the essentials of an aircraft loan down payment so you can know what to expect.
Keep reading to discover how much money you’ll need for your airplane loan and what factors affect that number.
How Much Should You Expect to Put Down?
When you’re considering an aircraft loan down payment, the standard range is 10-30% of the airplane’s purchase price. This percentage varies based on the lender’s specific requirements and your financial situation.
Keep in mind that this initial investment is designed to protect lenders and demonstrate that you’re serious about your commitment. But what impacts where you fall in this range? Read on to find out.
What Factors Determine Your Down Payment?
Various details influence how much you’ll pay upfront for your airplane loan. Here’s a quick breakdown of the main factors lenders look at:
Aircraft Age and Type
Is your aircraft brand new, or does it have a few years in the skies? Older planes or niche types (like experimental models) often need higher down payments. Why? Because lenders see them as higher-risk investments.
Loan-to-Value (LTV) Ratio
The LTV ratio compares the amount borrowed to the aircraft’s value. Lower LTV ratios (where you put more money down) make lenders more confident in offering loans at favorable terms. A higher down payment can often secure better private aircraft financing terms.
Your Financial Profile
Your credit score, income, and debt-to-income ratio all play a major role. Strong financials can help lower your aircraft loan down payment requirement and even improve your loan terms.
Type of Financing and Lender
Traditional banks, specialized aviation lenders, and private financing options all have different criteria. However, specialized aviation lenders often offer more flexible private aircraft financing terms.
Take the Next Step Toward Flying
Now that you know what goes into calculating an aircraft loan down payment, you’re one step closer to owning your dream airplane. From the condition of the aircraft to your financial profile, every detail counts.
If you’re ready to take the leap, reach out to AirFleet Capital for expert help navigating your financing options.