Financing an affordable plane, or, is aviation REALLY available to the masses

Okay, I'm new to this endeavor, although I have wanted to be a pilot all my life. I am now 51, the kids are all through (or about to be) with college, and I figure it's time to finally pursue my dream. I have been a KitPlanes subscriber and reader for the last 15(?) years. I have joined EAA. I have been a YouTube junky for the last 3 months. I have joined several discussion boards. I have read multiple articles. The one subject that I see a lot of talk about with the EAA movement and the AOPA is they like to claim that PPLs are being opened up to the middle class, especially with the old fleet of Cessnas and Pipers from the 60s being so cheap on Trade-a-plane and the like. These days you can finance your PPL training. Insurance doesn't seem like a huge expense. I was getting excited!

So here is a real-world example of hopes dashed, and I hope someone out there can tell me "it's not that bad... what you experienced is not the norm everywhere you go."

I had decided that the most economical path was to purchase an old Piper 140 in which I would get my training. The flight school I investigated gives 2 prices for instruction - $40 per hour + the cost of the rental, or $45 per hour in your personal plane. I think they have a Piper that they charge $120 per hour for rental. So I figure it wouldn't take much past a couple hours per month using my own plane to at least break even. I found a couple $20,000 +/- planes for sale. Not saying I would take either of those planes, just running a "what if". I have also seen on the EAA site that they are affiliated with (an unnamed airplane finance company), and that you can finance your plane purchase up to 20 years. So I jumped on their convenient calculator. $167 per month. Cool! Insurance looks like about $750 per year, so that's like $62.50 per month. Hanger fees.... are you kidding? Okay, tie-down fees at the airport I want to take lessons from are $75 per month. Then there's fuel and oil. The annual will require me putting back about $100/mo into a savings account, and that's if nothing needs to be fixed at the annual. So now we're up to about $400 - $450/mo. That's fine. That's all good. That's just 4 hours of instruction to break even. I can do that, and then some.

Then I call the (unnamed airplane finance company)... Oh, no sir you can't finance a $20K plane for 20 years (I kinda get that). You could only get 10 years financing for a $20k plane. No, if you finance (not purchase price, but finance) $25K or more you could go to 15 years. And you need to put 15% down. So now $25,000 / .85 = $29,411 - I've got to buy a $30,000 plan AND have $5000 as a down-payment to get a 15 year term. But that's cool... @ 7% interest, that's $226.07, so now we are up to ~ $510/mo... oh, wait, insurance is higher because of the more expensive plane you just bought. Now that cost is up to $80/mo. So now... $515/mo.

And after all that, I still wasn't deterred. Until I called another financing company to check on competitive terms. I found out I didn't ask enough questions. Like closing costs. This FC wants over $2000 in closing costs. What's my credit rating? (redacted- but what one would consider "good" - well over 700) What's my debt ratio? What are my monthly debt bills? "Multiply that figure by SIX. I said SIX... That's how liquid they want you to be. We are talking north of $12,000 + the $5000 down payment, + the $2000 in closing costs. That's nearly $20,000 they want me to have sitting around in savings to buy a $30,000 plane?

Now people, I'm not saying I don't have that. I'm not saying it is fair or unfair. All I'm asking is, is aviation REALLY available to the middle class? Because The scenario I just painted is, in my opinion, a MINIMUM situation. Nothing could be described in that as extravagant. Please. Tell me I've got this all wrong.

Home equity loan!

I suppose...

Airplane finance companies seem to be for people buying really, really expensive airplanes. If you're on a budget, you will very likely find much better options on your own. That was my experience. Look at it like buying an older used exotic or sports car for, say, $25K or more. Say you 're buying an 80s vintage Ferrari. You're pretty much on your own, really. Save up cash, get a HELOC, whatever. Just make sure you have a plan and a budget.

Finding a partner/co-owner or two, or a flying club, will make things A LOT more palatable. You're not going to be flying every day, why pay for the airplane every day? One co-owner cuts your purchase and fixed costs in half. Ad a third and you're paying 1/3. Yes, you need to be careful about how you do it, but I'm here to tell you it can be done. I pulled operating agreements from several sources and built one that fit our structure and airplane. We have two owners and we're thinking of maybe adding a third.

One more thought. It might be more convenient to do your training in a Cherokee or a 172, but if you've been a Kitplanes subscriber and EAA member, you oughta have figured out by now that a solid used Experimental can be a fraction of the cost of a certified plane to own and operate. Just as a single example, our RV-12 cost more than a Cherokee, but we figure our operating cost -- all in, wet, including overhaul reserve -- at about $33 per hour. And it's quite a bit faster, too, while burning premium from the corner gas station at about 5 GPH. The last annual cost us less than $200.

Try your local bank/credit union instead of an aircraft finance company. You might be pleasantly surprised although you might have to shop around a bit. First Pryority Bank in Pryor, OK is another option -- they specialize in aircraft financing.

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Originally Posted by ulpilot

Home equity loan!

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No! No! Do not go this route for such a relatively small amount of money. Why would you want to sign over your house(making assumptions that you are mortgage free and the equity is so much greater than the amount you require) for such a small amount of money?

Do this: Go shop around at banks and credit unions and ask them how much they're prepared to give you on a LINE OF CREDIT without any collateral and at what interest rate? Ideally you're looking for prime+1 as the best deal.

While a HE loan may be risky if you do it wrong, it it isn't the wrong answer in all cases. For example, if you have the assets, but you have money in investments earning you more than the loan interest will cost. Or maybe you have the cash, but are not comfortable with wiping out your cash reserve for the purchase. Worst case, you liquidate your investment or use the cash reserve to pay off the loan. Not every HELOC is a bad idea, and the interest rate is usually far less expensive than other routes.

Alaska USA Credit Union does lots of airplane loans. Might be only available in the western states, however.
I would start with a two seater, I think. Can always rent a Cherokee or 172 when needed.

Meh... you can find $15k to $30k Piper 140s all over the place. That's not the problem.

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Originally Posted by Floatsflyer

No! No! Do not go this route for such a relatively small amount of money. Why would you want to sign over your house(making assumptions that you are mortgage free and the equity is so much greater than the amount you require) for such a small amount of money?

Do this: Go shop around at banks and credit unions and ask them how much they're prepared to give you on a LINE OF CREDIT without any collateral and at what interest rate? Ideally you're looking for prime+1 as the best deal.

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Why would you assume I am mortgage-free? I'm talking about the middle class. The middle class do not own their homes outright. A lot of them don't even have a mortgage these days, but rent.

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Originally Posted by DaleB

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One more thought. It might be more convenient to do your training in a Cherokee or a 172, but if you've been a Kitplanes subscriber and EAA member, you oughta have figured out by now that a solid used Experimental can be a fraction of the cost of a certified plane to own and operate. Just as a single example, our RV-12 cost more than a Cherokee, but we figure our operating cost -- all in, wet, including overhaul reserve -- at about $33 per hour. And it's quite a bit faster, too, while burning premium from the corner gas station at about 5 GPH. The last annual cost us less than $200.

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Oh, I fully intend to build my own while having the Piper to use during the construction process. Looking at a Ch640 maybe.

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Originally Posted by geosnooker2000

Why would you assume I am mortgage-free? I'm talking about the middle class. The middle class do not own their homes outright. A lot of them don't even have a mortgage these days, but rent.

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For the purpose of your financincing an aircraft question, mortgage free or not is totally irrelevant to the solutions available to you. Based on the short personal profile you provided, I made an assumption which by your response still does not tell me if you are or not. For your own purposes it just does not matter!

However, your opinions on demographics as they relate to home ownership in the US, are just that, opinions without a shred of evidential substance to support them. Given the climate, making up s**t is fast becoming the abnormal norm.

FYI: According to a 2017 report by ATTOM Data Solutions, 34% of ALL American homeowners are mortgage free. According to the US census in 2016, the US is a nation of homeowners. Though 100 million rent, they're outnumbered by more than 2 to 1 by those who own their own home. Furthermore, the rate of home ownership has remained almost the same since 1960. In 2018, the rate was 64.2% as compared to 1960 when it was 65.2%.

I tried to give you some advice regarding the better option of a line of credit without collateral but you chose to respond in a manner that is corrosive and irrelevant to your own question. You should swallow your agenda and still look into it as a viable and common sense solution.

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Originally Posted by geosnooker2000

Oh, I fully intend to build my own while having the Piper to use during the construction process. Looking at a Ch640 maybe.

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If you're thinking about a CH640, you might also consider a used AMD CH2000 Alarus. The Alarus is a factory built Part 23 certified 2-place airplane.

The CH640, though advertised as a four place airplane, is really a 2+2 at best.

Here's a low time Alarus advertised for $25k.

https://www.controller.com/listings/aircraft/for-sale/list/manufacturer/amd/model/alarus-ch2000 (copy and paste into browser URL field; apparently hyperlink doesn't work).

My advice is to fly a rental to learn to fly. Students are notoriously hard on aircraft (both air frame and engine), so put that thrashing on the rental plane. Additionally, there is so much you don't know about what you will like in a plane or how you will use it. You'll learn that with experience while learning to be a pilot. Once you have your ticket and develop relationships with other pilots, you'll get to fly or ride in a few different planes and gain a much better knowledge base about your wants and needs, as well as many of the pitfalls of buying or owning your own planes, so can make much more informed decisions. A lot of this will only come with experience. Then you will be ready to buy.

And why finance? I've been middle class all my life. Now retired in my early 60s and still middle class. Most of my life I have had two planes in my stable, and currently have two planes that I built. When I had no money, I had no planes. My aviation funds came from the new cars I never owned. I let someone else take the depreciation on the cars, so mine are all old and had lots of miles before I owned them. I haven't had a car payment (or a plane payment) in nearly 40 years, or a house payment in 10.

My view of my aircraft is that they are toys. I would be very sad to not have them, but they are still just toys and life will go on if I don't have them. So I only carry liability insurance, so my planes cost less to insure than my cars (which also only have liability). And if one of them gets damaged, I am the only one that's going to fix it. Since I built both of my current planes, my maintenance costs are also very low. I burn Mogas most of the time, so my fuel costs are significantly less.

Aviation has always been a big and very important part of my life, as well as a big part of my identity. However, I always keep in mind that, for me, it is still just a hobby. I don't do debt for hobbies.

Proportionally, the cost isn't much different from what it was when I learned to fly a gazillion years ago. Yeah, it only cost me $1200 to get my private ticket. But I only made $5000 that year. My first plane (Champ) cost $3800 (for which all the old timers told me I paid way too much). But I also didn't make spit for wages. So I don't see that aviation is any less affordable than it was 40+ years ago when I was getting started.

-Cub Builder

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Originally Posted by Floatsflyer

For the purpose of your financincing an aircraft question, mortgage free or not is totally irrelevant to the solutions available to you. Based on the short personal profile you provided, I made an assumption which by your response still does not tell me if you are or not. For your own purposes it just does not matter!

However, your opinions on demographics as they relate to home ownership in the US, are just that, opinions without a shred of evidential substance to support them. Given the climate, making up s**t is fast becoming the abnormal norm.

FYI: According to a 2017 report by ATTOM Data Solutions, 34% of ALL American homeowners are mortgage free. According to the US census in 2016, the US is a nation of homeowners. Though 100 million rent, they're outnumbered by more than 2 to 1 by those who own their own home. Furthermore, the rate of home ownership has remained almost the same since 1960. In 2018, the rate was 64.2% as compared to 1960 when it was 65.2%.

I tried to give you some advice regarding the better option of a line of credit without collateral but you chose to respond in a manner that is corrosive and irrelevant to your own question. You should swallow your agenda and still look into it as a viable and common sense solution.

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If you took my reply as corrosive (great word, by the way), then I apologize. I certainly didn't mean to be argumentative. Suffice to say, if your figures are right, I am shocked. I would have guessed no more than 10%. Not to push the issue, but are you sure we are talking about the same demo? 34% of all homeowners does not mean 34% of the American Public. More like ... 14%? Here is a link that might get you to thinking from a 45 degree angle on this: https://fivethirtyeight.com/features...eir-mortgages/
True enough it is 5 years old, but I believe the principles haven't changed. The main one being - the vast majority of those that have paid off their personal residence are 65 and over, and my position is, the majority of the younger subset are not what one would call "middle class". Just to be clear, I'm going by the Pew definition of $40,500 - $122,000.
But stepping back and looking at that... The difference between $40k and $122k as it pertains to the ability to own and operate a GA plane seems like night and day. If all those articles and commentary opinions were talking about people making over $100k, then I would agree with them.

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Originally Posted by Scooper

If you're thinking about a CH640, you might also consider a used AMD CH2000 Alarus. The Alarus is a factory built Part 23 certified 2-place airplane.

The CH640, though advertised as a four place airplane, is really a 2+2 at best.

Here's a low time Alarus advertised for $25k.

https://www.controller.com/listings/aircraft/for-sale/list/manufacturer/amd/model/alarus-ch2000 (copy and paste into browser URL field; apparently hyperlink doesn't work).

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Thanks for the heads-up on that Alarus for sale. I am aware of them from all my research into the CH640. There is a big advantage to building your own airplane, one of them being the ability to massage the cabin dimensions (with the proper W&B and CG calculations of course).

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Originally Posted by cub builder

My advice is to fly a rental to learn to fly. Students are notoriously hard on aircraft (both air frame and engine), so put that thrashing on the rental plane. Additionally, there is so much you don't know about what you will like in a plane or how you will use it. You'll learn that with experience while learning to be a pilot. Once you have your ticket and develop relationships with other pilots, you'll get to fly or ride in a few different planes and gain a much better knowledge base about your wants and needs, as well as many of the pitfalls of buying or owning your own planes, so can make much more informed decisions. A lot of this will only come with experience. Then you will be ready to buy.

And why finance? I've been middle class all my life. Now retired in my early 60s and still middle class. Most of my life I have had two planes in my stable, and currently have two planes that I built. When I had no money, I had no planes. My aviation funds came from the new cars I never owned. I let someone else take the depreciation on the cars, so mine are all old and had lots of miles before I owned them. I haven't had a car payment (or a plane payment) in nearly 40 years, or a house payment in 10.

My view of my aircraft is that they are toys. I would be very sad to not have them, but they are still just toys and life will go on if I don't have them. So I only carry liability insurance, so my planes cost less to insure than my cars (which also only have liability). And if one of them gets damaged, I am the only one that's going to fix it. Since I built both of my current planes, my maintenance costs are also very low. I burn Mogas most of the time, so my fuel costs are significantly less.

Aviation has always been a big and very important part of my life, as well as a big part of my identity. However, I always keep in mind that, for me, it is still just a hobby. I don't do debt for hobbies.

Proportionally, the cost isn't much different from what it was when I learned to fly a gazillion years ago. Yeah, it only cost me $1200 to get my private ticket. But I only made $5000 that year. My first plane (Champ) cost $3800 (for which all the old timers told me I paid way too much). But I also didn't make spit for wages. So I don't see that aviation is any less affordable than it was 40+ years ago when I was getting started.

-Cub Builder

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I'm not going to defend myself on financial decisions in this thread, other than to say, We don't buy new cars, we don't have credit-card debt, and we are Dave Ramsey fans. But this is getting too micro-centric. I was asking if, in general, people felt the average ordinary guy (or gal) can afford to fly? Not - "can geosnooker2000 afford to fly?"

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Originally Posted by geosnooker2000

I was asking if, in general, people felt the average ordinary guy (or gal) can afford to fly? Not - "can geosnooker2000 afford to fly?"

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With a few reservations. If you think of "middle class" being in the $40K to $122K income range, then "middle class" covers a whole lot of territory -- and of course income is less than half the story. The more "average" the more you may have to scrimp, save, compromise, and defer. I know several members of my local EAA chapter who I am pretty sure are not particularly wealthy, yet own a plane. or two. I'm not particularly wealthy, and I own half a plane... could swing the whole thing if I had to. And I'm building another one, very slowly, so some day I'll have two.

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Originally Posted by geosnooker2000

I'm not going to defend myself on financial decisions in this thread, other than to say, We don't buy new cars, we don't have credit-card debt, and we are Dave Ramsey fans. But this is getting too micro-centric. I was asking if, in general, people felt the average ordinary guy (or gal) can afford to fly? Not - "can geosnooker2000 afford to fly?"

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This is an interesting question and I'm appreciative of the thoughts of everyone here on this topic. Just to clarify, I think your original question was if it's feasible for someone to own their own airplane by themselves.

"Can someone afford to fly" is quite a bit different.

I think there are certainly options that allow someone to 'affordably' fly, but sole ownership of an airplane is a different story and I'd argue it's not all that attainable for the average person. It's one of the reasons I feel so strongly about flying clubs and partnerships. Both knock down costs considerably and at that point I'd argue the 'average person' could afford to fly if they are willing to give up some control over the airplane.

Here is a little sample of what I'm talking about:

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A common misconception leads some to think ofpersonal or small business aircraft as only for theextremely wealthy. In fact, many people of middleclass means fly airplanes less costly to acquire thana new family car

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- last paragraph in https://www.aopa.org/-/media/files/a...cy/what_ga.pdf

Given "many people of middle class means" acquire their NEW family car (it said new) with an auto loan, I am just poking the bear and challenging this notion. The main point being, the local bank doesn't require you to have a 6 month emergency fund in place in order to borrow money to buy a car, and they don't require "closing costs". OR as much as a 15% down-payment... Maybe I'm just bewildered at NAFCO and the like, and that's all it is.

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Originally Posted by geosnooker2000

All I'm asking is, is aviation REALLY available to the middle class? Because The scenario I just painted is, in my opinion, a MINIMUM situation. Nothing could be described in that as extravagant. Please. Tell me I've got this all wrong.

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I've always been middle class guy, I've owned 5 airplanes so far but I would have never been able to do it the way you are suggesting. While you can buy a ~$25k airplane today, you can also spend $20k just in the first year of owning and flying it if you plan to fly and write checks. Same for the second year.

If I could go back and do it all again, I'd buy an airplane before taking the first lesson.Would have flown more, had a bigger head start on leaning how to keep cost down and would have owned even more planes.

The price of a "new family car" also covers a lot of ground. One model of 4-door sedan alone runs $16K to $40K depending on trim level. It's not even slightly difficult to spend well over that. And of course car manufacturers offer all sorts of financing that you simply won't get for a 40 or 50 year old airplane.

Again... forget "aircraft financing" companies. Pay for this like any other $20-30K toy you would buy, like a boat or a classic car. And do look into clubs and partnerships, it's more than likely you won't fly it enough yourself to require sole exclusive access to it. In 3 years of co-ownership, my partner and I have never had an actual conflict that inconvenienced either of us. Just one other owner cuts the fixed costs in half, and you've always got someone to help out when something needs to be done or you don't feel like flying alone.

But in the end, the "Can I afford it?" question can only be answered by one person. If you're toward the $40K end of the "middle class" scale, you're gonna have to really want it or share ownership. If you're on the other end, it might be a little easier.

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Originally Posted by geosnooker2000

I'm not going to defend myself on financial decisions in this thread, other than to say, We don't buy new cars, we don't have credit-card debt, and we are Dave Ramsey fans. But this is getting too micro-centric. I was asking if, in general, people felt the average ordinary guy (or gal) can afford to fly? Not - "can geosnooker2000 afford to fly?"

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Wow. Sorry if you saw my post as an attack. It certainly wasn't meant to be. It was meant to say "If I can, so can anyone else." And went into a bit of detail as to how I have been able to own multiple aircraft for over 40 years now. My apologies if you read something else into it.

-Cub Builder

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Originally Posted by cub builder

Wow. Sorry if you saw my post as an attack. It certainly wasn't meant to be. It was meant to say "If I can, so can anyone else." And went into a bit of detail as to how I have been able to own multiple aircraft for over 40 years now. My apologies if you read something else into it.

-Cub Builder

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Oh, no, NO! I didn't take it as an attack! I'm just having a conversation, and I appreciate ALL of y'all's views. I knew that first sentence was gonna come across more "extra" as the kids say these days than I intended. I just was saying I wanted for us to discuss this from a macro perspective, and not a micro perspective.

I was considering buying a 1965 Cessna 150 a couple of months ago, went to see it a couple of times, went over the logs and took a flight in it. It was very affordable and the TTAF was less that 4000 hrs and the engine was strong and had a little over 1200 hrs on it. I even had an instructor that said he would use it for his students as much as possible. Also, I could have bought it outright without financing it and there was no tie down fee at the airport. BUT, after checking on insurance and annual inspection fees, getting the required ADS-B, and thinking, what if I have to do major work to the engine, and what about that squeal in the radio, I could see thousands of $$$ going by by, and that would have put me in a bad place. So, for now, I'll just rent, I won't be flying as much as I'd like, but my mind is at ease.
Bob

A few thoughts:
1. I would at least solo with a rental before buying my own plane.
2. If you are a stable individual you may ask a seller if they will carry a note on a plane you are interested in. I know people who have done this and were able to get a nicer plane than they would have gotten from a bank. be professional, have it drawn up correctly, offer to have the payments auto deposited to their account. Make the down payment big enough so that they feel good about it. Make sure the plane is insured with their ownership interest protected in case something does go bad.
let us know how it works out! -Robert

I financed a $16,800 Cessna 120 with a loan from my credit union, and paid it off early. I financed a $24,000 Stinson 108-2 with a loan from AOPA’s finance company partner at the time, and had no trouble, and I didn’t have any 6 times the $ needed! Payments were low. I was also only in my 30’s!

I’m glad I did, I was able to get two planes that were a blast to fly and were not available to rent, anywhere. I put hundreds of hours on them flying whenever I wanted, and I didn’t have to schedule with anyone. I still have the Stinson. Do it, you will not regret it, try a bank loan or another finance co if one gives you too much grief- they’re out there!


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Originally Posted by dwmmg08

I financed a $16,800 Cessna 120 with a loan from my credit union, and paid it off early. I financed a $24,000 Stinson 108-2 with a loan from AOPA’s finance company partner at the time, and had no trouble, and I didn’t have any 6 times the $ needed! Payments were low. I was also only in my 30’s!

I’m glad I did, I was able to get two planes that were a blast to fly and were not available to rent, anywhere. I put hundreds of hours on them flying whenever I wanted, and I didn’t have to schedule with anyone. I still have the Stinson. Do it, you will not regret it, try a bank loan or another finance co if one gives you too much grief- they’re out there!


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So you are saying the terms of the (airplane-specific) financing company I contacted was not the norm? I hope that's the case. How long ago did you finance your Stinson?

The terms I got were far more of a normal loan. I had good credit, it was more of a 10 year note though. It has been some time ago, but I never got the impression that they weren’t wanting to make the loan due to the size, etc.: it went through quickly.


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