Did you know a small change in interest rates could mean thousands of dollars over the life of a loan? That’s why picking the right rate, fixed or variable, matters. But how do you know which is better for you?
In this blog, we’ll explain both interest rate types in simple terms. You’ll learn when fixed rates make sense, when variable rates might be better, and how to decide based on your goals. If you want clarity before committing to an aircraft loan, keep reading.
When Fixed Rates Make More Sense
Fixed interest rates stay the same for the entire loan term. That means your monthly payment won’t change, no matter what happens with the market. If you’re looking for predictability, this setup makes planning things much easier.
When fixed rates are a good choice:
- Interest rates are relatively low when you apply
- You want consistent monthly payments
- You plan to keep the aircraft and the loan long term
The main appeal is peace of mind. You always know what you’ll owe, which can help if you’re budgeting or managing other expenses. For many people financing an aircraft for the first time, that stability feels like a smart and reassuring way to begin.
But fixed rates aren’t perfect. They usually start higher than variable rates. That means you could pay more upfront—even if market rates stay low for years. And if you plan to sell the aircraft or refinance within a few years, you may not fully take advantage of the long-term benefits of a locked-in rate. It’s a great tool for long-term planning, but not always the lowest-cost option.
When Variable Rates Might Be a Better Fit
Variable interest rates start lower than fixed rates. They’re based on a financial index and change over time, usually once or twice a year. This means your monthly aviation loan interest can go up or down depending on market trends.
Why some buyers go with variable rates:
- They want the lowest starting payment possible
- They plan to pay off the loan early (within a few years)
- They’re confident rates will stay steady or drop
It’s not just about short-term savings. If you only need financing temporarily (for example, you’re expecting a large bonus or planning to sell your aircraft soon), the flexibility of a lower initial payment makes sense.
That said, variable rates come with risk. If rates climb, your monthly payment will too. That can make it harder to budget and lead to higher total loan costs over time. If you’re in it for the long haul, this unpredictability can outweigh the benefits.
Confidence in Every Step with AirFleet Capital
At AirFleet Capital, we help aircraft buyers across the U.S. explore the best aircraft loan options for their specific situation. Our team takes the time to explain everything clearly. We’re honest, responsive, and easy to work with.
Check out our loan programs and application process to see how we help buyers like you move forward with confidence. If you’re ready to get started, we’re here to help every step of the way.