FINANCING SOLUTIONS

Financing Options Legal and Tax Considerations Financing Simulation Request

FINANCING SOLUTIONS

Financing Options Legal and Tax Considerations Financing Simulation Request

Financing Options

Choose between 3 types of financing

Traditional Loan

Finance Lease

Operating Lease

Traditional Loan

With a traditional loan, you receive financing to purchase an aircraft, allowing you to become the owner from the start of the loan. You are required to make regular payments throughout the loan term, which can range from 5 to 10 years, typically including both principal and interest. The aircraft usually serves as collateral for the loan.

Advantages

1
Predictable Payments
Traditional loans offer fixed payment structures, allowing you to budget and manage your cash flow with regular and predictable payments throughout the loan term.
2
Equity Accumulation
As you make payments, you build equity in the aircraft, which can be advantageous for future resale or obtaining additional financing.
3
Tax Benefits
Interest payments on the loan may be tax-deductible, providing potential tax advantages while allowing you to fully own and control the asset.

Finance Lease

With a finance lease, you’ll only be expected to provide an initial down payment (as a higher initial rent) towards the acquisition cost of the aircraft (typically between 15% and 50% of the aircraft cost, according to your preferences). The bank partner provides the remaining balance of the acquisition cost in your finance lease. The terms of a finance lease typically cover a period of 5 to 12 years. At the end of the lease, you have the option to purchase the aircraft at a predetermined residual value (usually between 5% and 15% of the initial value of the asset).

Advantages

1
Lower Initial Capital
You only need an initial down payment, often in the form of a higher initial rent, which reduces the capital required compared to a direct purchase.
2
Tax Benefits
Lease payments can often be deducted as operating expenses, offering significant tax advantages.
3
Customized Financing Options
Lease terms can be tailored to meet your specific business needs, including the duration, payment amounts, and purchase conditions.
4
Increased Privacy
Leasing an aircraft provides increased privacy, as your name or business entity does not appear on ownership documents or in public records, which can be advantageous for maintaining confidentiality and protecting your privacy.

Operating Lease

With an operating lease, you gain access to an aircraft for a defined period, usually shorter than the aircraft's useful life, without acquiring ownership. The lease typically covers a term of 1 to 7 years, after which the aircraft is returned to the lessor. The lessee is responsible for regular lease payments, which include maintenance and insurance costs.

Advantages

1
Flexibility and Short-Term Access
Operating leases offer access to an aircraft for a specified term, allowing you to adapt to changing needs and technological advancements without long-term commitments.
2
Reduced Financial Burden
Leasing an aircraft avoids the large upfront capital expenditure required for purchasing, allowing companies to manage their cash flow more effectively and allocate funds to other strategic investments.
3
No Depreciation Costs
The lessee does not bear the depreciation costs of the aircraft, as ownership remains with the lessor. This helps the lessee avoid the financial impact of asset depreciation.
4
Tax Benefits
Lease payments are typically considered operating expenses and can be fully tax-deductible, offering potential tax advantages for the lessee while keeping the aircraft off the balance sheet.

Legal and Tax Considerations

Navigate the Complexities with Confidence

Understanding the legal and tax implications of aircraft ownership is crucial to making informed decisions. We collaborate with legal and tax professionals to provide a comprehensive overview, helping you navigate the complexities and make the most of your investment.