Quick guide on Private Jet Financing

What are the ways of financing a private jet purchase? 

The main schemes for financing an aircraft purchase transaction are a loan secured against the aircraft, and leasing. The choice of the loan or leasing scheme depends on the country of registration of the aircraft. For example, under the Austrian law, only a loan is possible. In other European countries, the law also allows leasing financing schemes. 

What are the amounts and timing of financing? 

The amounts of financing are considered individually, however, as a rule, banks are interested in financing those transactions where the cost of a private jet is at least 10 million US dollars. The maximum amount of financing is also determined individually based on the financial soundness, stability and transparency of the client. 

Are there any peculiarities of obtaining a loan for buying an aircraft on the secondary market?

Financing an aircraft on the secondary market depends on its actual technical condition — the older the aircraft, the less favourable conditions offered by the bank. 

What are the requirements for the borrower? 

The main bank requirements are disclosure of assets, source of wealth and sources of income of the of the borrower. At the initial stage, the bank requests information about the direct owner of the aircraft and about the planned handing of the aircraft over to commercial operation. Based on the analysis of these data, preliminary consent is given, after which the bank starts checking the documents. The borrower provides full information about the purchased aircraft, the timing of its delivery, confirms their solvency (not only by the personal income tax certificate, but also by confirmation of the profits of their company). Depending on the bank and client, the check takes from one week to 1.5 months, after which, with a positive decision, the bank starts negotiations and determines the funding rate. The whole process from the moment of applying to the bank until the decision on the loan takes about 1–4 months. 

Does the bank impose any restrictions in terms of aircraft operation? 

There are no restrictions regarding the choice of the operator company which will operate the aircraft in question. However, according to the terms of the bank, during the loan repayment period, the aircraft is secured to the bank, therefore, the bank must be confident in the operator. And it should be a reliable European company with a good reputation. If the owner delays a payment or there are other negative circumstances, the operator must, at the bank's request, deliver the aircraft to the impound area. 

Does the bank set its own conditions for aircraft insurance? 

The bank offers the owner a number of insurance companies, usually foreign, for the insurance of risks. The risks of the bank include: civil liability, hull insurance, and damage to passengers. If the owner of the aircraft suggests their own insurer, the latter must be, by all means, agreed with the bank.