The most common red flags for lenders are:
Missing or incomplete logs. With missing logbooks, if a borrower is in a strong financial position and what’s missing isn’t significant, there may be little or no impact on the loan. Still, it’s good to plan on the structure of the loan being adversely affected.
High airframe hours. Although problematic for piston models, high airframe hours may not be an issue for turbine aircraft (see “Magic Numbers,” September 2021 AOPA Pilot Turbine Edition).
An engine that is close to or past the recommended time between overhauls. Plan on extra reserve requirements, a lower loan-to-value analysis, or a higher down payment.
A history of damage. There may be mitigating factors—for one, if the damage is relatively insignificant. It also depends on whether there’s been a fair amount of time since the damage occurred and if it’s documented. And finally, has the airplane been repaired by a reputable service center? If all these things are true, a lender may be more inclined to offer financing but may value the airplane for less, want you to put more money down, or shorten the amortization.
Obsolete or aged aircraft. Certain aircraft are just going to be problematic. In the turbine world, that includes obsolete or aged equipment. For example, an IAI Westwind would fit into both categories. An Eclipse might also fit into the obsolete category. While the brand is not old from an avionics and airframe perspective, it had a lot of hype initially, problems getting to production, and several company ownership changes. Some might call it a “10-foot pole” brand, as in most banks wouldn’t touch it with a…. The beautifully designed, Italian-made Piaggio pusher turboprop is an example of a storied brand that has become an “orphan” aircraft. Too few, too specialized, and too nonstandard.