High Finance

A Fun Look at Airplane Financing Terms


October 27, 2014

What if you are thinking of purchasing an airplane, and you don't have enough cash on hand? You would ask yourself just how much do you need, how much can you borrow, and on what terms? What does one cost and what will the monthly payments be? We all buy cars, so we have an idea of what they cost and what a car payment might be over three to six years, but aircraft are on a whole different plane (so to speak).

To start with, what are the terms that aviation lenders offer? The Aircraft Owners and Pilots Association (AOPA) list the following available loan terms:

Aircraft Category Down Payment Term of Loan Median Interest Rate
Kits 20% 10 years 7.375%
Piston Single 15% 20 years 5.825%
Piston Twin 25% 15 years 6.225%
Turboprop & Turbine 20% 20 years 4.5%

So, let's have some fun and look at some planes, shall we? I will select aircraft that are available in the base version of Microsoft Flight Simulator X. I will next determine which of the above categories they fall into. I will take the price from the entry for that Aircraft in Wikipedia, and then we will determine the down payment and monthly payments.

Aircreation Trike Ultralight

This one is a kit to build an aircraft that can best be described as a hang glider with a seat underneath and a lawnmower engine with a propeller on the back. The cost is $9,800. So, with 20% down ($1,960) we are financing $7,840 over 10 years at 7.375% for a monthly payment of: $92.55.

Cessna Skyhawk

This is the workhorse of the single engine private planes. It costs $307,500. We're going to have to put $46,125 down and finance the remaining $261,375 over 20 years at 5.825% for a monthly payment of: $1,846.28. Now this little beauty seats two up front with room for two additional passengers, and it costs more than my condo.

Beechcraft Baron

With a twin engine and seating for six, this lovely lass sells for $1,095,000. Since it is a twin engine piston plane, we have to put 25% down. After shelling out $273,750, we finance the remaining $821,250 over 15 years at 6.225% for a monthly payment of: $7,030.40.

Beechcraft King Air

This is a turboprop. It has room for two crew and seven passengers. It is highly affordable at only $3.4 million. With $680,000 down, we will finance the remaining $2,720,000 over 20 years at 4.5% for a monthly payment of $17,208.06.

Boeing 747-400

Before you say I'm nuts, note that Jimmy Stewart owned a 747-100 in the film Airport 77 - so, someone could buy one. Which category to put it in? It's a jet. Jets have turbines. Good enough for me. What does it cost? Only about $250 million, depending on how the plane is configured. We have to put down 50 million bucks. We will finance $200 million over 20 years at 4.5% for a monthly payment of: $1,265,298.75. That is per month. Let's put that in an airline and fly it an average of 20 days a month. That plane costs $63,000 a day not counting fuel expense. It seats about 400, so if they can fill it up on every flight, the cost is about $160 per passenger. Most airline planes make more than one flight per day, but this one makes some seriously long flights. So consider, that is the portion of your airline ticket that goes just to buy the plane.

It might be fun to own an aircraft worth a quarter billion dollars. It's fun to think about at any rate. And, thanks to my computer and my flight simulator software, I get to fly all of these planes without leaving the comfort of my own den.