The Aviation Finance Options
At a glance, aviation finance can seem similar to more common vehicle finance, however, there are key differences that come about from the differences in both the size of the capital investment and the slower depreciation that comes from stronger secondary-market value. For lower rates and cost-effective financing, it is essential that you obtain aviation finance from a specialised lender who tailors their products with these unique characteristics in mind.
Typical aviation finance options include:
Asset-Secured Aircraft Loan
Structured as an asset-based loan with the aircraft serving as collateral, a secured aircraft loan represents a basic repayment structure that results in final ownership at the end of the term. Payments are made monthly for the agreed length of the loan, with transfer of the plane or helicopter’s ownership once repayment is completed.
Finance Lease
Aircraft-based finance leasing is developed for easier cash flow during a mid- to long-term leasing period, and a final balloon payment designed to transfer ownership at the end of the leasing term. Finance leases for aircraft are often structured with larger upfront payments and substantial final payments to provide a lower monthly payment that represents less financial stress on day-to-day outgoings. Final ownership is often optional, providing flexibility that considers real-world financial changes towards the end of the term.
Operating Lease
With full ownership retained by the leasing provider, operating leases are a cost-effective aircraft rental, typically involving maintenance and servicing packages that provide a worry-free approach to aircraft use. Set monthly payments that cover the majority of ownership and usage obligations are easy to manage and budget, and the ongoing support from the leasing company eliminates many ownership concerns. At the end of the lease, the aircraft can either be returned or the lease extended.
Unlike traditional asset finance (such as car loans), aviation finance involves more complex assessments that include the aircraft valuation, your financial history and creditworthiness, aircraft experience, and your knowledge and compliance with all aviation regulations.
The Cost of Aircraft Financing
Aviation finance involves several factors to determine its overall cost to you. These include:
- The Aircraft Value - More expensive aircraft require larger loans...
- The Aircraft Age and Valuation - A full valuation of the aircraft will be required, which can lead to additional valuation fees in the case of secondary market and older models.
- Loan to Value (LTV) - A deposit of 10% to 30% is typically required, resulting in LTV of 70% to 90%. Lower LTV ratios will benefit from more flexible terms and lower rates, making larger deposits a significant factor in determining the monthly cost of the aviation finance.
- Your Creditworthiness - If you are looking at aviation finance as a private individual, your credit history, income, and monthly outgoings will be scrutinised by the finance provider; businesses must provide relevant business financials and forecasting to present the appropriate profile for borrowing on the required scale.
- Interest Rates and Loan Terms - The majority of aviation finance involves terms from 5 to 10 years, with interest rates that may be fixed or variable, and will be based on the current market conditions and risk assessment.
- Usage - Both core financing structures and insurance are affected by your projected usage. Aircraft with higher expected usage will result in greater monthly costs, with end-of-term fees applied if set usage limits are exceeded.
Obtaining Aviation Finance
Aircraft funding is a tailored solution that requires in-depth consultation with finance specialists. It is advisable to engage the services of a professional broker such as Clifton Private Finance to ensure a smooth application process as well as to secure better terms.
Stage One - Consultation
An initial consultation process is essential. It is important for all parties to thoroughly assess your needs and cover the full cost of aircraft ownership, with financing and running costs all fully accounted for.
This stage may also include specialist consultation regarding the purchase of the preferred aircraft, ensuring that all regulations are met and that the contract of sale is properly undertaken.
At Clifton PF, we will evaluate the potential aviation finance providers who are best aligned with your financial position and need and discuss the pros and cons of each option with you thoroughly, providing impartial advice needed for you to make a fully informed decision.
Stage Two - Application Submission
Working alongside our specialist team at Clifton Private Finance, you will prepare your application. This includes obtaining all essential documentation, including identity documents, financial statements (if a business) or proof of income and affordability (if as an individual).
Your application will also include full details of the chosen aircraft and its value.
Supporting documentation, such as your developed plan for the aircraft usage and adherence to all aviation regulations and guidelines, will be prepared and submitted during this stage.
Stage Three - Loan Structure and Approval
The finance providers will assess your application and structure a suitable financing package to meet your unique requirements.
Your partners at Clifton Private Finance will be on hand to help negotiate and finalise any funding structure at this stage to ensure your needs are fully considered and met.
Stage Four - Completion
The agreement is finalised, all fees and deposits paid, and the aircraft bought. Congratulations.
Aircraft Types and Estimated Monthly Financing Costs
How much does buying or leasing an aircraft actually cost? To help understand the true cost of aviation finance, below is a list of popular aircraft types, their estimated purchase prices, and the expected range of monthly financing costs over ten-year terms.
The lower end of the estimated monthly payment range reflects leasing options and more favourable interest rates, while the higher end accounts for full ownership loans and higher interest financing.
(For illustration only. This data assumes a 20% deposit and no final balloon payment.)
Aircraft and Monthly Aviation Finance
Aircraft Model |
Estimated Purchase Price |
Estimated Monthly Payment |
Cessna 172 Skyhawk |
£250,000 |
£2,300 - £3,200 |
Piper PA-28 Cherokee |
£150,000 |
£1,400 - £1,900 |
Cirrus SR22 |
£600,000 |
£5,600 - £7,800 |
Beechcraft Bonanza G36 |
£800,000 |
£7,400 - £10,300 |
Robinson R44 Helicopter |
£400,000 |
£3,700 - £5,200 |
Cessna Citation CJ3+ (Private Jet) |
£7,000,000 |
£65,000 — £90,300 |
Note that this table only includes the cost of purchasing the aircraft - fuel, regulatory fees, maintenance, and other costs are additional and must be considered for comprehensive budgeting.
Aviation Finance with Clifton Private Finance
Aviation finance requires a fully customised approach with dedicated finance specialists to guide you from the initial consultation through to the final purchase. Clifton Private Finance have the expertise and track record needed to provide the strongest support to ensure you obtain the aviation funding you need.
Working with us means:
- A tailored finance solution that puts your needs first - Every client is different, so we begin by listening to you and your specific circumstances, aligning our experience and knowledge of the marketplace to your individual requirements.
- Access to expert advice and guidance - Our background in obtaining high-value asset-based loans for our clients, both in aviation and other sectors, gives us the knowledge you need to make a truly informed decision. With no bias, we will guide you through your options and present every benefit and disadvantage of each potential funding offering so that you can select the one that best works for you or your business.
- The most flexible terms and competitive rates - With established relationships with the key players in aviation finance in the UK, we’re able to provide access to specialist aviation funding products that have the lowest rates, with terms that are tailored to your unique circumstances.
- A smooth application process - Our team work obtaining high-end finance for our clients every day, giving us the experience to ensure a smooth and effortless application process. Our standard operating procedures have been honed over years to make sure no document is forgotten and no potential stumbling block is left unconsidered. By working with us, you ensure that the whole application process simply flies by.
If you are looking to purchase or lease an aircraft, getting you the swiftest transportation to enjoy both business and leisure anywhere in the world, speak to Clifton Private Finance today.