It’s common for people to misunderstand the differences between co-ownership and fractional ownership.
Co-ownership is frequently what people mean when asking about fractional ownership. If you are looking to purchase an aircraft with multiple partners, this is more commonly regarded as a partnership loan. The good news here is that there are a lot more financing options. Lenders are comfortable financing partnerships with up to four members using standard loan structures amortized up to 20 years. Beyond four members, lenders will typically only find comfort if the partnership is operating as a flying club.
Fractional ownership, where there’s a fractional management provider like NetJets or PlaneSense and the company flies and maintains your “share” of the aircraft, has very limited financing options. The reason for this is that lenders are rarely able to fully secure their collateral interest in these loans. Also making things challenging is they must assess both your personal financial situation and the financial health of the fractional operator.
For the strongest fractional providers, limited financing options exist; you can expect terms of no more than five years. As an aside, if you anticipate flying more than 25 hours annually, fractional ownership can be a cost-effective way to gain access to larger aircraft—just don’t expect to be able to fly the airplane.
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