Why do Finance Companies Hate Sailplanes?

Anyone know why US Banks & Aircraft Finance companies are so averse to
glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on
the floor of my garage) financed through NAFCO or others... But when
researching loans for my next sailplane they all say "sorry, no can
do" as soon as they find out the aircraft doesn't have an engine!

Anyone have thoughts, or finance companies they'd recommend?

NOTE: I've contacted Lea County State Bank twice. Both times the "SSA-
glider-loan-guy" has been out of the office, and the terms their other
staff have quoted me haven't been all that impressive... 6% - 10% for
5-7 years is not much better than what I can do with a Personal
Unsecured Loan at any reasonable bank. Most collateralized aircraft
loans (even for small experimental kits) are on 7 - 15 year terms and
4% - 9%!

*sigh*

--Noel

I should add that this is not just a rant because I'm personally
affected. It has larger implications for US Soaring:

How do we expect new folks to get into the sport if they cannot find
reasonable paths to sailplane ownership?

Additionally, how do we expect clubs (or small partnerships) to
acquire aircraft or make capital/fleet improvements, if they cannot
find reasonable financing? Sure, they could do a business loan if
they're a large-enough entity; but collateralized/secured loans are
far more affordable than unsecured loans, and a far better way to
handle asset acquisition. There's a reason why most people do car
loans and mortgages, instead of unsecured loans or cash payments for
these large assets!

--Noel

On Thursday, June 6, 2013 2:44:00 PM UTC-6, noel.wade wrote:
I should add that this is not just a rant because I'm personally

affected. It has larger implications for US Soaring:



How do we expect new folks to get into the sport if they cannot find

reasonable paths to sailplane ownership?



Additionally, how do we expect clubs (or small partnerships) to

acquire aircraft or make capital/fleet improvements, if they cannot

find reasonable financing? Sure, they could do a business loan if

they're a large-enough entity; but collateralized/secured loans are

far more affordable than unsecured loans, and a far better way to

handle asset acquisition. There's a reason why most people do car

loans and mortgages, instead of unsecured loans or cash payments for

these large assets!



--Noel

Try Lea County Bank in Hobbs, NM.
https://www.onlinelcsb.com/asp/products/product_3_5.asp
They've been financing gliders for 50 years with, they say, not one default. They're eager for your business.

On Thursday, June 6, 2013 4:44:00 PM UTC-4, noel.wade wrote:

Additionally, how do we expect clubs (or small partnerships) to
acquire aircraft or make capital/fleet improvements, if they cannot
find reasonable financing?

A club that I know first hand recently placed notes (loans) with multiple members for $3000 each at 4% to finance a new glider. Club members can be counted on to be a lot more flexible about repayment than any bank would be should income fall below projections. Given current CD rates, members are pretty happy to get 4% on the note. This club has realistic dues and rental fees and therefore a good historical cash flow, so I feel quite secure holding a note (and I get XC coaching in a new two place glider).

The mistake that I've seen two other clubs make is that they set dues and glider rental fees unrealistically low, so there is no positive cash flow. Since the club gliders are deteriorating, these clubs are in a slow death spiral. If they set the rental fee for the SGS 2-33 at $20 a flight, they would have a positive cash flow. If students canceled their cable TV bill, they could easily afford $70 a flight compared to the current $55. If the CFI-Gs would embrace Condor, fewer tows would be needed, more students could be accommodated, and the total cost of learning to fly a glider work about to be about the same as the current low and unrealistic rental fee system.

On Jun 6, 1:32*pm, "noel.wade" wrote:

Anyone know why US Banks & Aircraft Finance companies are so averse to
glider loans?

What's a glider loan?

At 21:37 06 June 2013, Bob Kuykendall wrote:
On Jun 6, 1:32=A0pm, "noel.wade" wrote:

Anyone know why US Banks & Aircraft Finance companies are
so averse to
glider loans?

What's a glider loan?

Noel, Call Robert Floyd over at Lea County. He doesnt know your
looking for a loan. his cell is 575-397-6609. He braggs that a glider
guy has never defaulted. He says its easy money.
Good luck, Doug

On 6/6/2013 3:27 PM, Doug Mueller wrote:
At 21:37 06 June 2013, Bob Kuykendall wrote:
On Jun 6, 1:32=A0pm, "noel.wade" wrote:

Anyone know why US Banks & Aircraft Finance companies are
so averse to
glider loans?

What's a glider loan?

Noel, Call Robert Floyd over at Lea County. He doesnt know your
looking for a loan. his cell is 575-397-6609. He braggs that a glider
guy has never defaulted. He says its easy money.

Easy money for him, for sure, if he is charging 6% to 10% (see Noel's
post above), and if there is no chance of default.

Good luck, Doug

"No can do" and "can do with a Personal Unsecured Loan at any reasonable bank" are contradictory statements. Is it you can't get a loan, or you just don't like the interest rate on offer?

I understand loan rates at LCB vary according to the type of glider. 2-seat trainers bought by clubs may qualify for lower interest rates.



On Thursday, June 6, 2013 2:32:59 PM UTC-6, noel.wade wrote:
Anyone know why US Banks & Aircraft Finance companies are so averse to

glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on

the floor of my garage) financed through NAFCO or others... But when

researching loans for my next sailplane they all say "sorry, no can

do" as soon as they find out the aircraft doesn't have an engine!



Anyone have thoughts, or finance companies they'd recommend?



NOTE: I've contacted Lea County State Bank twice. Both times the "SSA-

glider-loan-guy" has been out of the office, and the terms their other

staff have quoted me haven't been all that impressive... 6% - 10% for

5-7 years is not much better than what I can do with a Personal

Unsecured Loan at any reasonable bank. Most collateralized aircraft

loans (even for small experimental kits) are on 7 - 15 year terms and

4% - 9%!



*sigh*



--Noel

On Thursday, June 6, 2013 4:32:59 PM UTC-4, noel.wade wrote:
Anyone know why US Banks & Aircraft Finance companies are so averse to glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on the floor of my garage) financed through NAFCO or others... But when researching loans for my next sailplane they all say "sorry, no can do" as soon as they find out the aircraft doesn't have an engine! Anyone have thoughts, or finance companies they'd recommend? NOTE: I've contacted Lea County State Bank twice. Both times the "SSA- glider-loan-guy" has been out of the office, and the terms their other staff have quoted me haven't been all that impressive... 6% - 10% for 5-7 years is not much better than what I can do with a Personal Unsecured Loan at any reasonable bank. Most collateralized aircraft loans (even for small experimental kits) are on 7 - 15 year terms and 4% - 9%! *sigh* --Noel

Your local bank that has "low" interest loans on cars can do so because they understand exactly what their risk is and how they will recover if the loan goes bad.
Since they don't know anything about what is securing the loan, they don't want the business.
Can't say that I blame them.
My old aircraft banker used to say gliders were his best loans because nobody ever walked away from them.
FWIW
UH

On 6/6/2013 4:33 PM, wrote:
On Thursday, June 6, 2013 4:32:59 PM UTC-4, noel.wade wrote:
Anyone know why US Banks & Aircraft Finance companies are so averse to glider loans? I can get my Sonex aircraft _KIT_ (as a pile of parts on the floor of my garage) financed through NAFCO or others... But when researching loans for my next sailplane they all say "sorry, no can do" as soon as they find out the aircraft doesn't have an engine! Anyone have thoughts, or finance companies they'd recommend? NOTE: I've contacted Lea County State Bank twice. Both times the "SSA- glider-loan-guy" has been out of the office, and the terms their other staff have quoted me haven't been all that impressive... 6% - 10% for 5-7 years is not much better than what I can do with a Personal Unsecured Loan at any reasonable bank. Most collateralized aircraft loans (even for small experimental kits) are on 7 - 15 year terms and 4% - 9%! *sigh* --Noel

Your local bank that has "low" interest loans on cars can do so because they understand exactly what their risk is and how they will recover if the loan goes bad.
Since they don't know anything about what is securing the loan, they don't want the business.
Can't say that I blame them.
My old aircraft banker used to say gliders were his best loans because nobody ever walked away from them.

So the bank understands its risk is zero. That should lead to a low
interest rate. Right?

FWIW
UH