FLYING's CFO gives his take on cash, traditional financing, and the middle ground most affluent buyers never hear about.
I stood with the Diamond Aircraft team at Oshkosh EAA AirVenture 2026 watching a ceremonious signing for a new twin engine DA62. The gentleman could not have beamed brighter as he shook hands with the Premier Aircraft Sales representative next to the sleek contours that epitomize the glider based frame of the DA62. This buyer had waited all summer for the chance to sign this purchase agreement at AirVenture. He was not the only one.
During the week, I saw Cirrus sell three SF50 Vision Jets in one day, and heard how the team at Aerista was on track to eclipse one hundred of these celebrated signings during the single week. The energy behind these sales continues an expanding growth trend for both new piston and new turbine aircraft. It is a particularly special moment to mark this kind of purchase at AirVenture among your closest 734,000 friends. What follows between the purchase agreement and the aircraft delivery may not be nearly as exciting, but it at least should not take away the enthusiasm.
One aspect that does seem to come too often with groans is the decision around whether to pay cash for the aircraft, or whether to navigate the often opaque aircraft finance underwriting environment. For some, that choice may feel predetermined. I am not referring to those with enough liquidity for the minimum 15% down payment, where the most feasible way to fill in the principal gap to the purchase price is an aircraft loan. Instead, I am referring to those with excellent credit and enough resources to pay for half, if not the whole aircraft, but who see the prospect of explaining their real estate portfolio or various business ventures as a nonstarter. In the regulated consumer banking industry where aircraft financing for the owner flown market lives, these affluent individuals that make up a large portion of FLYING's readership are penalized by a debt to income underwriting framework that can be inflexible to the aspects of a personal financial statement that comes naturally to the high net worth pilot.
I saw this early on in my career underwriting for private wealth clients at one of the South's largest financial institutions. And later, as I approved multi-million dollar lines and loans for founders and real estate investors, I understood that complexity in how someone makes their money can often be satisfactorily mitigated by the strength found in their net worth. It is this second step in the approach that separates the consumer banker from the private banker, and for owner flown aircraft financing, it separates a hassle from a loan seamlessly closed.
But does that matter? Why not just pay cash? Is there a middle ground — a Goldilocks scenario — that is right for me?
Some people we at FLYING Finance talk to are in the debate of whether or not to just pay cash for their next aircraft. It may sound like a luxury, but it is more often the psychological benefit of not having debt payments than an investment or financial planning perspective that drives the desire to pay cash. One couple once told me that they paid cash for anything they considered a toy, and that was their household policy whether it was an airplane, a boat or a classic car. The cash transaction is simplified, clean, done. And there is nothing wrong with living debt free.
As a career banker and now Chief Financial Officer for a portfolio of companies, paying cash can feel more disconcerting than financing. I am familiar with debt as a tool, to be sure, but even more so, my time working with individuals and companies taught me the importance of maintaining suitable liquidity. The old saying: cash is king. And, without giving investment advice but observing that we have been in an era these past few years where the stock market has outperformed its historical average, and some investment grade stocks offer dividend yields approximately equal to an aircraft loan rate, using cash to avoid potentially tax deductible loan interest seems to be an inefficient way to manage liquidity. In Finance, we call this the hurdle rate. In Economics, we refer to opportunity cost.
I do not imagine any reader has found themselves shocked at this point that a banker is supportive of financing as a tool. But how many people run their personal finances or family office like a business? And does this mean the answer is always the lowest down payment and the largest loan option?
Traditional aircraft financing involves a bank or other lender structuring a loan that is both relevant to the intended mission for the aircraft, as well as meeting the conventional demands from the consumer market for customarily low, long term, fixed rate financing. Like real estate asset classes, each aircraft make and model has a market, with fluctuations in demand depending, in part, on the spec sheet. Unlike real estate, aircraft move, depreciate more quickly depending on such aspects as hours flown, and private aviation requires current and proficient pilots to reduce the likelihood of damage to the aircraft, and themselves. To balance this, piston aircraft financing is generally subject to a similar consumer underwriting framework as residential mortgages. Any risk associated with an aircraft that moves, may decrease in value, or need regular maintenance such as annuals, is largely considered mitigated by both a low monthly debt to income ratio threshold and sufficient liquidity beyond the down payment.
That debt to income threshold is exactly where real estate investors, founders and other business owners may run into constraints — a dynamic explored in more detail in our Aircraft Loan vs. Personal Loan guide, and worth a look before you assume a "no" from one lender is a "no" everywhere. Traditional consumer financing is well suited to the well heeled airline pilots and other regularly employed customers we serve. It even serves the small business owner and the executive officer whose financials may have plenty of zeroes, but remain streamlined in scope. But real estate, particularly when owned directly or through a disregarded entity, naturally has a tighter margin between the rental income and the underlying mortgage payment than what fits the debt to income consumer underwriting approach. The more properties, usually the tighter ratios may appear, even though the scale of the income may be evidence of a sound, professional real estate investor and may be complemented with excellent credit and more than sufficient liquidity. It is not extended IMC for the VFR pilot, but it is a more complex flight path to a loan approval. If you're not sure which category you fall into, our Am I Ready to Finance? guide is a good place to start.
The affluent individuals desiring financing to preserve their liquidity have a couple options. Some opt to work with experienced aircraft financing teams that understand affluent and commercial lending. This means providing financials and supplemental information to well document sources of income, addbacks, rent rolls, debt schedules and the like, in order to maximize how much of the aircraft the lender is willing to lend. Others are looking for clearer skies for a less complex flight path.
For those looking for clearer skies, where excellent credit and strong liquidity take the day, is through Low Loan to Value (LTV) financing. Whether it is timing, privacy or just a desire for a smoother process, a higher down payment, up to 40% of the purchase price, removes a lot of questions. The lender is no longer asking for tax returns or rent rolls, but scores the loan based on credit score and bank or brokerage statements. It is not quite the signature loan of days gone by, but it moves swiftly through the approval process so the pilot can focus on that upcoming aircraft delivery with the same enthusiasm he or she had at the outset of their aviation journey.
Unlike asset based financing, or non-recourse financing, where rates may be significantly higher and payment terms significantly shorter, Low LTV financing still contains all the normal components of traditional financing — underwritten by a bank or credit union, a competitive fixed rate (see our rates), long term payment schedule up to twenty years, and for the turbine market, engine program requirements. Pilots have a head start on their equity position compared to traditional financing, and can be rotating off the runway within only a couple of weeks from application.
Which path is right for you is a personal decision that no banker or aircraft finance broker can truly answer. But that does not mean your decision has to come through unclear conditions. We continue to look for ways to make aircraft financing transparent and understandable, whether for the first time aircraft buyer, or the seasoned pilots looking for their next backcountry adventure or club seating turbine.
The psychological benefit of paying cash is real, but so are the benefits that come with financing and leaving cash on hand or in investments. For real estate investors, entrepreneurs and other customers with the cash balances available, choosing the middle ground with a larger down payment may provide greater privacy, reduced potential capital gains tax liability incurred for selling out of investment positions, a streamlined underwriting process, lower monthly loan payments than traditional financing, and a continued liquidity position that feels just right.
If you are considering an aircraft purchase, or maybe you are one of the ones that signed at EAA AirVenture in Oshkosh, and you would like to talk — simply talk — about your aircraft, your mission and your options, let us know.
