Private pilots, corporate pilots and corporate executives all benefit greatly from having their own aircraft available 24 hours a day. In this age of advanced technology, time is definitely money, and if you have to rely on commercial airline schedules and unexpected delays, you may suffer from the “time to spare, fly in” philosophy they are subject to. frequent flyers. The choice is whether it is beneficial to buy an aircraft or consider aircraft leasing. From light aircraft to jumbo jets, the sky is the limit when it comes to aircraft financing options.
The convenience of having your plane available is an invaluable option for many people. The choice to lease versus buy an aircraft is very similar to that of a car if it is for business purposes. Typically, a purchase will allow the owner to take depreciation. With aircraft leasing, the lessee can deduct the payments as current expenses. Leasing is also considered “off balance sheet” so a company’s financial statement will give them a positive financial leverage ratio and will not show up as a lien or liability.
The application process is quite similar for leasing as it is for outright purchase. The down payment or deposit is generally based on the creditworthiness of the business or individual and may require a personal guarantee. Typically, you can expect a 10%-15% down payment with a 7-15 year amortization schedule.
Most companies have a payment calculator on their website, so you can anticipate payment amounts before you start the application process. Most aircraft leasing companies will not consider an aircraft over 20 years old. You are expected to submit three years of company and personal financial statements, tax returns, bank records and business references.
As with a car, an aircraft lease may have specific conditions when it comes time for the lease to expire. Your contract may state a specific number of hours on the engine just like a car lease contracts you to a maximum number of miles.
There may also be a very financially attractive offer at the end to encourage you to buy the plane. Ultimately, leasing aircraft will be less expensive than buying, considering the tax advantages and the selling price of an aircraft. You will have a luxury aircraft at a fraction of the cost. What a perfect setting for any pilot or business executive!
