Financing Issues To Consider When Purchasing An Aircraft

Same as with any other major purchase, acquiring an aircraft usually involves securing a loan.

Ft. Lauderdale, FL (Law Firm Newswire) September 13, 2010 – -The financing of an airplane, whether for business or personal needs, is a complicated process, with many different options and lending terms to consider.

Most fixed rate loans for airplanes range anywhere from 10 to 25 years, though shorter loan periods can also be found. And as

with other loans, there are fixed rate and adjustable rate options.

The lender will need to create a complete profile of you and the aircraft to complete the loan, which may require:

Information about you and your finances

A pre-purchase inspection

Proper insurance for the airplane, its crew and passengers

An executed Aircraft Purchase Agreement

Similar to other loan processes, the lender will then prepare other documentation, including a security agreement, a promissory note and a surety from a third party to enhance credit worthiness.

Of course, there is always leasing if purchasing is not an option. Leases can be signed for periods ranging from less than a year to 10 years.

“Regardless of which option is chosen, it is important to think of the full financial impact that acquiring an airplane can have on your personal or business expenses. You must also consider the tax and regulatory costs,” said Stewart Lapayowker, a Fort Lauderdale, Florida-based attorney who focuses his practice on aviation and aviation transaction law. “The Internal Revenue Code and federal tax issues, state tax laws and the Federal Aviation Administration will all impose rules that impact the potential use of the aircraft.”

For example, each state has its own sales and use taxes for aircraft. Companies should carefully research the relevant taxes and not depend solely on the seller’s advice. In fact, companies may wish to hire an aircraft tax specialist to do this research for them.

If corporate aircraft owners don’t address these important issues, it could lead to lost tax deductions, penalties and interest.
If you are thinking of purchasing or leasing an aircraft for personal or business purposes, it is recommended that you contact an experienced aviation professional.

Stewart H. Lapayowker, P.A. is an aviation attorney and aviation transaction lawyer, devoting his law practice to airplane and jet transactions. To learn more, visit Businessaviationcounsel.com.

Stewart H. Lapayowker, P.A.
5360 N.W. 20th Terrace
Suite 205
Ft. Lauderdale, Florida 33309
Banyan Terminal at Ft. Lauderdale Executive Airport
Call: 954.202.9600

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