Why do Finance Companies Hate Sailplanes?

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.
As for Personal Unsecured Loans: They are a different animal entirely
- its not _just_ a matter of interest rates. You're not putting up
any collateral, so you've got higher interest-rates _and_ shorter
terms. These combine to make monthly payments cost-prohibitive or
impractical. Aircraft finance companies will happily do 7-20 _year_
terms for a prop-plane; and at an interest rate that is 25% to 75%
_lower_ than a personal unsecured loan (which most banks cap at a 5
year term). Why is it that they won't do the same for a sailplane?

Let me put this another way: The reason people can afford homes is
because you take out a mortgage. The bank believes in the long-term
value of your collateral (your home) and thus is willing to do a very
long-term, low-interest-rate loan against it. Could you imagine trying
to buy a home on a 5-year loan term, at 10% interest? Its just not
practical for that size of asset. Aircraft finance companies treat
airplanes in a similar manner to the way banks treat homes. But they
_don't_ treat sailplanes in the same manner they treat airplanes.

For those recommending LCB (aka LCSB) - please see my NOTE in my
original post. I have been told that he is out of the office until
Monday. I'm not gonna call the guy's cell phone while he's on vacation
or out for personal reasons - I'll call on Monday and confirm my
options - but the staff's comments so far make me think its not going
to be super-appealing. And if the other bank staff are quoting me
improper interest rates or term lengths, then that's a problem they
need to address.

Finally: Even if LCSB _does_ offer glider loans that are comparable to
the aircraft loans we can get for prop-planes, I still find it
disturbing/sad that they are the sole major provider. Competition
would encourage better pricing (i.e. loan terms) and more choices for
consumers. If the business really is that good/profitable for them,
why aren't there at least a few other financing companies out there
who are willing to make "easy money"? Its not a volume business to be
sure, but neither is aircraft financing in general; and easy money is
easy money.

--Noel

On Jun 6, 2:21*pm, son_of_flubber wrote:

A club that I know first hand recently placed notes (loans) with multiple members for $3000 each at 4% to finance a new glider.

Sure, this works if your club is healthy and of a certain size, and is
looking for sailplanes within a certain range of prices.

But how many $3000 loans do you need to get, to afford a new (or
slightly-used) 2-seat trainer?
How long are those loan-terms? My guess is that they're on a 10-year
time-scale (or more)...

Your method is a viable option for some; but my point is that the
market already has other solutions for powered aircraft. Why aren't
those solutions available for sailplanes?

This is both a rhetorical question I'm shouting into the ether, and a
real question (I'm curious if any of the sages here on RAS can point
to something that happened in the past, or something obvious I'm
overlooking).

--Noel
P.S. Called AOPA Aircraft Finance. They also expressed puzzlement
about the lack of sailplane financing options - and since they act as
a broker they had to state that they couldn't help me because none of
their partners/vendors do glider loans. They _did_ say that if more
people called and asked, it would give AOPA some info to take to
lenders to try to get the market opened up. *shrug*

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 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 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