PRESENTED BY FLYING FINANCE
If you’re considering financing an aircraft, now is the time to secure your loan. The end of the year is fast approaching, and that means many individuals and businesses are looking to make large purchases to claim tax deductions.
If you want to avoid the stress of buying during the holidays, it’s smart to get pre-approved in August or September. As with any financial decision, timing is crucial.
Why is there time pressure?
According to Keller Laseter, Chief Commercial Officer at FLYING Finance, the answer is simple: vacation.
“The holidays are the biggest factor in our lack of time,” Laseter said.
There are numerous holidays in the fourth quarter, which slow down the process considerably.
“If the banks are closed, we lose a lot of valuable time and your loan will not progress,” said Laseter.
While some sellers and lenders may still be eager to close a deal with you regardless of the time of year, it is an unavoidable fact that from October to early January, many banking and finance professionals are planning their vacations and focusing on family – which means closing your loan is not a priority for them.
“The best way to avoid peak season is to get ahead of the people who are late,” Laseter said. “If you respond quickly, communicate and have everything under control, you’ll be at the top of the list.”
Why start shopping in August and September?
Waiting until the fourth quarter may result in delayed closings, the sale of aircraft to cash buyers, and worse options and terms.
Customers who buy an aircraft for business reasons usually have complex financial documents, which means it takes time for lenders to secure the loans. The more experienced and prepared a customer is, the more questions banks and lenders have to clarify.
If many buyers go through this process at the same time, loan processing may take longer and some closings may be delayed until next year, which may not be ideal.
Likewise, inventory is much more limited at the end of the year, and there are fewer options for late buyers. The sooner you decide to take to the skies in a new aircraft, the more selection you will find, and the more sellers and brokers will be willing to negotiate terms to make those sales happen.
Can both corporate and private aircraft owners benefit?
Absolutely! In fact, securing your aircraft loan early is the safest way to benefit from depreciation advantages and minimize your tax burden.
“Mid-December always sees a large number of customers approaching the finance team looking to take out a loan for a large purchase before the end of the year,” said Laseter. “This is our busiest time. While we do our best to accommodate these requests, it can be difficult.”
Both corporate and individual clients can gain an advantage by submitting the required documents as early as possible. Once approved, it is easy to get re-approved if time runs out.
Why should you get financing pre-approved in the fall?
Two of the biggest factors that add time to the financing process are submitting all financial documents on time and accurately and finding the right deal on the aircraft that meets your needs. Once you have the financing side of the equation completed, you can focus on shopping around and be confident in your financial situation.
The larger and more complex the aircraft, the more thorough the process needs to be. Pre-purchase inspections, appraisals, logbook reviews and other factors mean you want to apply for your loan as early as possible so you can be happy with a thoroughly inspected aircraft.
Without pre-approval, the time, energy and money spent selecting and inspecting the right aircraft can be wasted.
“Just like buying a home, someone with a permit in hand when making an offer on an aircraft will be taken more seriously than someone without one,” Laseter said. “If you have a permit and the aircraft of your dreams comes up for sale, you can move the sale along quickly and have less risk of the seller opting for a cash buyer.”
First steps
Depending on how your finances are arranged, it’s a good idea to reach out to the investment brokers, accountants or wealth management firms you work with to get a complete picture of your assets and liquidity. Also, make sure you know the details of any existing loans or liabilities so you can go into the pre-approval process with realistic goals.
If you are not sure what documents you need, the FLYING Finance team will be happy to answer any questions you may have. If you get started today, you will get your dream plane faster.
Instead of spending the holidays sorting out details, you can fly and enjoy the skies.