By: Mike Smith & Alaina Joseph, Scope Aircraft Finance
Purchasing an aircraft is undoubtedly one of the largest financial decisions one can make. Given the large acquisition cost, it’s very possible financing through a bank is an important part of that financial decision. When going through the finance process, here are five things to think about:
The History of the Bank
As we’ve seen in recent weeks, economic changes can drastically alter a bank’s financial condition and ability to offer the services they intend to offer. When determining what bank to work with you should understand the bank’s values and how they make decisions. Is the bank focused on long term success for both customers and shareholders? Or is the bank focused on short term gains? Another point to consider is how long the bank has been in business. Experience through economic cycles is usually indicative of a bank with a strong foundation. That strong foundation coupled with a consistent, disciplined approach to decision making should be indicative of the bank’s long term health and viability.
The Aircraft Lending Group’s Experience in Market
While the history and financial health of the bank you work with are important, the history of the aircraft lending group matters, too. Understanding whether the bank has a full team dedicated to aircraft lending to finance your aircraft is important. Longevity in the industry and experience with the type of aircraft you are purchasing demonstrates a deeper understanding of the unique world of aircraft lending. Don’t be afraid to ask how long the group has been in business. Experience matters.
The Underwriting Process
In the office, we’ve talked about the concept that, in life, people care about two things: their health and their money. Potentially, they might care more about their money than their health. Regardless, one’s financial condition is an incredibly personal thing. When you apply for an aircraft loan, you will share a lot of that personal financial picture so having trust in the team that will be working through this process with you is important. To develop that trust, it might help to have a good understanding of the bank’s underwriting and approval process.
Who will do the underwriting? Who approves the loan and how long will that take? It’s your finances, and you should have understanding and comfort with this important and vulnerable process.
Who will you contact going forward?
Once the loan closes your bank will be working with you through the life of the loan, and hopefully many more to come. But the question is: who will you call if you need anything? Your aircraft loan is important and you should work with a bank that respects that and provides easy ways to connect with them now and in the future.
A bank should view your aircraft loan as more than just a “deal”. As we’ve established so far, your aircraft loan is incredibly personal. It’s not just a deal, it’s a big deal. You and the bank are entering into a long-term relationship which merely starts at the closing table. The question becomes: does your bank look at the ongoing relationship the same way you do?
Financing an aircraft doesn’t need to be a challenging, cumbersome experience. Your bank should enhance your purchase and ownership experience, not detract from it. Remember, there are many great aircraft lenders in the industry. As you embark on this journey of integrating financing into your purchase, consider the 5 areas discussed in this article, and if you do, you’ll find a bank worthy of sharing in your ownership journey with you. And that’s the only way to fly.