Why do Finance Companies Hate Sailplanes?

On Thursday, June 6, 2013 5:46:47 PM UTC-6, noel.wade wrote:
On Jun 6, 4:14*pm, Bill D wrote:

"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?



Bill - The issue is that aircraft-specific financing companies say "no

can do" when they discover the aircraft is a sailplane, not a

propeller-driven airplane. I can get loans for propeller-driven

aircraft all day long... I find it incredibly odd that they flatly

refuse to deal in sailplanes - but will happily finance prop-planes,

helicopters, and aircraft kits. They're willing to finance more-

complicated, higher-maintenance, more-costly-to-own assets that don't

necessarily have the same proven value-retention that Sailplanes do.


It's education. The SSA undertook to educate LCSB about the value of making sailplane loans. We all need to do the same with the banks who do airplane lending. Ask a loan officer to call LCSB and discuss the business.

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

On Jun 6, 4:33*pm, wrote:

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.

Right, UH. I understand _normal_ consumer banks not understanding the
business - its a specialty thing done at a low volume. But that
doesn't answer the question why Aircraft Finance companies don't do
it. I mean, shouldn't _they_ understand the aircraft world? How is an
aircraft kit (a damn pile of aluminum parts that'd resell for 1/10th
the purchase price) "better collateral" or a "safer bet" for these
finance companies than a glider loan? It just bewilders me...

--Noel
(who senses a business opportunity; but doesn't have the cash reserves
to become a lender)
*chuckle*

On Thursday, June 6, 2013 2:32:59 PM UTC-6, noel.wade wrote:

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

I looked at LCSB and they were not even close to being competitive. Check with some of the local credit unions. Mine actually will finance a sailplane but I was in a position to do a home equity at a better rate with deductible interest. Shop around and good luck.

Go local! I went to the bank I and my company does business with and received a 3.75% rate on a 5 year note with 20% down. I asked if they would be interested in more glider nationally loans they said that they were a local bank and are only interested in local loans.

Noel shoot me an email. Jordan(dot)E(dot)Pollock at gmail dot com.

E