Aircraft Finance - Private Aircraft

Private Aircraft

Financing for the purchase of private aircraft is similar to a mortgage or automobile loan. A basic transaction for a small personal or corporate aircraft may proceed as follows:

1. The borrower provides basic information about themselves and their prospective aircraft to the lender.
2. The lender performs an appraisal of the aircraft's value.
3. The lender performs a title search based on the aircraft's registration number, in order to confirm that no liens or title defects are present. In many cases, a title insurance policy is procured to protect against any undetected defects in title.
4. The lender then prepares documentation for the transaction:
   • A security agreement, which establishes a security interest in the aircraft, so that the lender may repossess it in the event of default on the loan
   • A promissory note, which makes the borrower responsible for any outstanding loan balance not covered by repossession of the aircraft
   • If the borrower is deemed less credit-worthy, a surety from a third party (or from multiple third parties)
5. At closing, the loan documentation is executed and funds and title are transferred.