Finance: Why use professionals?

A new buyer, or first-time buyer of a high-end, single-engine aircraft, may not appreciate or understand what professional services offer. Those with more ownership experience generally understand the value of professional guidance.

Buyers of less expensive aircraft, especially those used only for personal travel, may not need every service. Even if you are buying an entry-level jet, you may be able to get away with ignoring an appraisal and save $2,000 in the process. You also may not need an aviation-oriented lawyer if you are not planning on creating a holding company for the aircraft or establishing a leaseback arrangement to a closely held business, saving you anywhere from $2,000 to $4,000 in legal fees. (When you do need an attorney, choose one who specializes in aviation.)

Everyone should appreciate the use of professionals, especially for escrow, financing, and even buying the aircraft. Care to skip the aircraft broker and just read for-sale ads on your own? You will save broker fees—but do you know how to recognize a faulty airplane? The aircraft broker buys and sells aircraft every day. Brokers also often have airplanes not yet listed that can be bought at a good price.

Let’s say you skip the finance broker—who may have access to many financing sources—by going to your local bank. Maybe you have a good relationship with your local banker, and the banker is satisfied with your financial situation. But when the loan reaches the bank’s credit committee, suddenly your fate is in the hands of decision makers who may not understand aircraft loans, or have heard unfavorable rumors about them. Satisfying the FAA when filling out aircraft loan paperwork is an art in itself—one not understood by most banks. If the bank should make a mistake, you may not find out until three or four years down the road when you want to sell your airplane.

As with the aircraft broker, the benefit of using a finance broker comes from the broker’s wide range of multiple finance companies and daily experience with financing airplanes. A broker can pair you up with the best-suited lender. A typical lender may offer one or two ways to structure a loan, while a good broker has access to financiers offering every variety of services that are available and tailored to best fit your situation. It’s the difference between an ice cream store offering just vanilla versus the Baskin-Robbins store across the street with Bobsled Brownie among its 31 flavors.

Letters from our July issue

Textron follows in the footsteps, methinks, of Northrop and its unfortunately ill-fated F–20 Tiger Shark (“Special Op,” July 2018 AOPA Pilot, Turbine Edition). Even an endorsement from Chuck Yeager failed to draw the attention of the Pentagon crowd to the F–20, ultimately relegated to the dust bin of failed, but better aeronautical ideas. Why? The same thing that, I think, will limit the Scorpion; a system not dreamed up by the Puzzle Palace pundits, thus unwanted and unsupported by the military branches and bereft of sufficient pork to gain congressional support. Let us hope such is not the case this time; that the Scorpion is not a case of history repeating itself.Bob Howie

AOPA 5731177
Friendswood, Texas

An owner spotlight in “Sweet Spot,” August 2018 AOPA Pilot, Turbine Edition incorrectly stated Nancy Auth’s occupation, the range of Nancy and David Auth’s Cessna Citation CJ2, and the locations of their homes. Nancy Auth is retired, and the CJ2 cannot fly nonstop between the Auths’ homes in Seattle and Florida. AOPA Pilot regrets the errors.