How Do Aircraft Loans Work? A Step-by-Step Guide

Securing an aircraft loan can feel like a complex undertaking, but it follows a logical progression. As brokers, our job at Jaken Aviation is to manage this process on your behalf, making it as seamless as possible. Here’s a step-by-step look at how a typical aircraft loan works, from initial inquiry to the moment the keys are in your hand.

Step 1: Pre-Qualification

The journey begins with a pre-qualification. This is a preliminary review of your financial standing, including your credit score, income, assets, and liabilities. It’s a quick, low-impact way to determine your borrowing capacity and demonstrate to sellers that you are a serious buyer. We can typically provide a pre-qualification letter within 24-48 hours.

Step 2: Application & Documentation

Once you have a specific aircraft under contract, you'll move to the full application. This involves submitting a detailed package to the lender, which usually includes:

• A completed loan application form
• Personal and business tax returns (typically 2-3 years)
• A personal financial statement
• Aircraft specifications and equipment list
• A signed purchase agreement

Step 3: Lender Matching & Term Sheet

This is where a broker adds significant value. Instead of you applying to multiple banks, we take your single application and present it to our network of specialized aviation lenders. We advocate on your behalf to find the best aircraft loan rates and terms available. The chosen lender will then issue a term sheet outlining the proposed interest rate, loan term, amortization, and other conditions.

Step 4: Underwriting & Aircraft Appraisal

During underwriting, the lender performs a deep dive into your financial profile and the aircraft's history. They will verify your information and conduct a thorough risk assessment. A crucial part of this stage is the aircraft appraisal and title search. The lender needs to confirm the aircraft's value and ensure its title is free of any liens or encumbrances.

Step 5: Approval & Closing

Once underwriting is complete, the lender issues a final commitment letter. From there, we move to closing. All necessary documents are sent to a trusted aviation escrow agent. You will sign the loan agreement and promissory note, and the lender will wire the funds to the escrow account. The escrow agent then pays the seller and files the new registration and lien with the FAA. Once the FAA confirms the filing, the transaction is complete, and you are officially an aircraft owner.

While the details can vary, this five-step process is the standard path to securing an aircraft loan. With Jaken Aviation as your partner, you can navigate each stage with an expert guide in your corner.