Now is the Time to Re-finance Your Aircraft

Now is the time to refinance your aircraft to take advantage of industry historic low rates. Re-financing your airplane is a fairly straight forward process. Banterra Aircraft Finance offers prompt professional service, extremely competitive rates and terms and with no application fee(s).  To expedite your refinance request, it is recommended you gather the following items for the credit review process: Updated Aircraft Specification Sheet with current aircraft times, installed options, avionics, etc., most recent two years personal 1040 complete tax returns with all schedules (to verify income), complete a simple Credit Application, and fill out a Personal Financial Statement .   Once the Banterra Aircraft Finance Underwriter receives this information, a credit decision usually can be processed in one business day or less.  Once your refinance request is approved, you’ll simply need to contact your current aircraft lender and request a pay-off letter and their wire instructions.  Now is also a good time to add any upgrades to the aircraft and finance a portion or all of those costs with your new loan. The majority of aircraft lenders will not advance “cash back” on new loans unless it’s for reimbursement of recent verifiable upgrades.  Cash back for other ventures not relating to capital improvements on the aircraft is not available.  

Benefits of Registering Your Aircraft in a Limited Liability Corporation

More and more aircraft buyers are registering aircraft in Limited Liability Corporations (LLC).  There are several benefits and reasons to utilize an LLC versus individual/personal ownership. LLC ownership may give you some level of liability protection in the event an incident occurs with the aircraft and you’re not the pilot in command (i.e. you let a partner, friend, instructor, etc. use the aircraft and had an incident, your personal liability may be limited).  Another benefit is to have your spouse be a Member with signature authorization in the event of your death, eliminating probate issues/taxes. Creating a new tax entity ease of accounting purposes, especially if used 100% for business can be beneficial.  With some aircraft lenders, an aircraft loan would not show up on your credit bureau(s) as it is booked in their systems as a commercial loan versus a consumer loan (helps keeps your credit scores up, you would still need to indicate loan to potential creditors as a “contingent liability” however).

If you are obtaining aircraft financing for the airplane, the lender will require copies of the LLC Operating Agreement, Articles of Organization, Certificate of Formation date stamped by the Secretary of State where incorporated and an E.I.N. number (you can use your social security number if it’s a single member LLC, otherwise you’ll need to contact www.IRS.gov for an EIN#).  On newly created and/or first time aircraft registration using an LLC, the FAA requires an LLC Statement in Support document that states date and state LLC formed, who the member(s) are, how managed, confirmation of ownership percentage, and verification of United States citizenship (FAA will not allow an aircraft to be registered in an LLC unless 75%+ of members/ownership are of U.S. citizenship).

For advice in your particular situation, consult your attorney.  

Financing Aircraft Avionics, Engine and Refurbishing Upgrades

Upgrading your aircraft with fresh paint, new interior, engine overhaul, and/or new avionics is an expensive proposition. Banterra Aircraft Finance (division of Banterra Bank) offers very competitive aircraft financing programs specifically designed for such endeavors.  It is recommended that you first obtain written estimates for desired upgrades from reputable shops and submit them to the bank along with a current aircraft specification sheet listing current airframe and engine times, installed options, etc.  Additionally, obtain a current pay-off from your aircraft lender if you have an outstanding loan.  Banterra Aircraft Finance will review your request, appraise your aircraft as it currently exists and also with requested upgrades. Depending on the equity in the aircraft, Banterra may be able to finance all, or a major portion of the desired upgrades.  There is no cost or obligation for a valuation review of your aircraft.  Banterra Aircraft Finance may be reached at (888) 254-5731 or www.BanterraAircraft.com. 

Aircraft Pre-Purchase Inspections

It is highly advisable that you have a qualified maintenance shop or aircraft mechanic thoroughly inspect an aircraft prior to purchase.  If you are borrowing money, most aircraft lenders will require a copy of the inspection report prior to closing on an aircraft loan.  The obvious items that usually “Make or Break” a sale are: undisclosed damage history, corrosion, missing aircraft maintenance logbooks, metal particles in the engine, low cylinder compression(s), engine close to or over recommended manufacturer life (TBO), aircraft out of Annual Inspection, poor overall maintenance, overdue Airworthiness Directives (AD’s), inoperable avionics, etc. 

Generally, once the inspection is completed, the buyer and seller re-group and discuss what impact on the sale the inspection has and who will pay for what, and in some instances, whether or not to proceed with the sale.  In many cases, buyers opt to have the price reduced by the estimated dollar figure for repairs and preform a fresh Annual Inspection to include items noted.  If you are financing the aircraft, lenders will require all major repairs and airworthiness items be repaired prior to closing on the loan. 

Things That Effect Your Credit Score

There are three credit reporting agencies that gather information from creditors on your credit “behaviors”, A.) Trans Union 2.) Equifax 3.) Experian.  It’s well known that simply paying your obligations in a timely manner (never 30 days or later) is the number one way to keep your score in good shape. Items that lower your score are late payments, high debt on credit card and lines near or at limits, new loans, judgements, cancelling long established credit cards that had excellent prior pay histories, tax liens, shortfall sales of property and the number one score killer, bankruptcy.  Credit “Inquiries” minimally lower your credit score and only in a significant way if numerous inquiries are initiated in a very short time period (auto dealers are notorious for having numerous credit reports pulled when they shop your credit to several lenders at the same time).  In general, a Credit Score over 700 is required by most aircraft lenders if you’re in the market for an aircraft loan. Credit data stays on bureaus for seven years in most cases and ten years for bankruptcy data. You may, by federal law, obtain a free copy of your credit score from any of the three credit reporting agencies, once a year and any time you have been denied credit and a credit bureau was pulled. Website addresses for all three credit reporting agencies: www.experian.com ,  www.transunion.com , www.equifax.com