Aviation Finance

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Aviation Finance

Purchasing an aircraft is a major financial decision that requires careful consideration.

The purchase price alone can be quite substantial depending on the type, age and condition of the aircraft.

In addition to the initial outlay, owning and operating an aircraft involves significant ongoing expenses such as maintenance, insurance, storage and crew costs.

  • Aircraft and Helicopters
  • Finance from £25,000 - £100m
  • Term up to 15 years
  • Aviation Mortgage
  • G and N register aircraft

Asset Finance Success Stories

£13m Asset Finance Loan for Pharmaceutical Business | Case Study
£13m Asset Finance Loan for Pharmaceutical Business
Area
London
Capital Raised
£13m
Date
November 2024
Fleet of Vans Refinanced to Release £160k for Business Growth
Fleet of Vans Refinanced to Release £160k for Business Growth
Area
Cardiff
Capital Raised
£160k
Date
September 2024
Fast Asset Finance for Two Tractors at Low Rate | Case Study
Fast Asset Finance for Two Tractors at Low Rate
Area
Somerset
Capital Raised
£558k
Date
July 2024

 See All Business Finance Case Studies

Why Our Customers Trust Us

With expert guidance, asset finance can provide an essential, versatile, cost-effective solution.

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Market-Leading Rates

We provide access to market-leading rates for every client, thanks to our relationships with asset finance lenders across the market.

Award Winning Team

Multi-Award-Winning Team

Our team of asset finance advisers have years of experience and are qualified to the highest level. We're proud to have numerous customer service awards to our name.

independent advice

Fully Independent

As an independent brokerage, we focus on your best interests when comparing asset finance options: from costs and terms to speed of service.

To book a free, no-obligation call with an adviser to discuss your options, contact us today.

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Our Experts

Our dedicated asset finance team have deep industry knowledge and years of experience.

Jon Moffatt

Jonathan Moffatt

Head of Business Finance

Ben Francis

Ben Francis

Finance Executive

James Ellcaott

James Ellacott

Commercial Finance Broker

How We Work

1. Get a Customised Quote

Our asset finance brokers will get an understanding of your business and your requirements, look at your financial forecasts and accounts, and provide a sense-check on what product(s) will best fit your needs, as well as how much you could borrow, and what the costs and terms could look like.

2. Compare Options

When you’re happy with the proposed solution, we’ll go away and compare options across the market. We’ll often present a range of choices ranging from lowest cost to most flexible, and we’ll talk you through the pros and cons of each if it’s a close decision.

3. Submit Your Application

If you’re happy with the terms we can source, we’ll handle the paperwork and submit your application for you. We’ll handle any issues and questions that may arise from the lender, and we’ll keep chasing your application to ensure funds are released as quickly as possible.

4. Receive Funds

You receive your finance success! We’ll always be here for any ongoing questions or support you require during your loan term. 

Speak to an asset finance specialist today

Get the funding your business needs to reach its full potential. We’ll guide you through the process and take care of the heavy lifting. 

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Aviation Finance

A Guide

Aviation Finance - How it Works

For many individuals and businesses, paying the full purchase price upfront is simply not feasible. This is where aviation financing can provide a valuable solution. By securing financing, buyers can spread out the cost of the aircraft over time through a loan or lease. This improves cash flow and makes aircraft ownership more accessible and affordable.

There are several financing options to choose from, each with its pros and cons. Loans allow you to borrow money to directly purchase the aircraft, while leases allow you to pay a monthly fee to operate it without taking full ownership.

With our help, you can explore your best option based on factors like tax implications, financial goals, and plans for the aircraft.

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The Different Finance Options Available for an Aircraft

If you want to buy an aircraft in the UK, you have several finance options to choose from. Each option has its own features, advantages, and disadvantages. Depending on your personal and financial circumstances, you can choose the one that suits you best:

Aviation Finance

Aviation finance is a form of leasing, where you pay a monthly fee to use the aircraft, but you do not own it. The monthly fee is based on the depreciation of the aircraft over the lease term, and the residual value at the end of the lease. The residual value is the estimated value of the aircraft at the end of the lease, which is agreed upon at the start of the contract.

The advantage of aviation finance is that you can enjoy flying a new aircraft without having to pay the full purchase price upfront. You also have lower monthly payments than other finance options, as you are only paying for the depreciation of the aircraft.

At the end of the lease, you have three options, you can either:

  • Buy the aircraft for the residual value
  • Sell it to a third party and pay the difference between the sale price and the residual value
  • Extend the lease for another term.

Aircraft Loan

An aircraft loan is a form of credit, where you pay a deposit and then monthly instalments to buy the aircraft over a fixed period of time. The monthly instalments include both the principal and the interest, and the interest rate is usually fixed. The aircraft is the security for the loan, which means that if you fail to make the payments, the lender can repossess the aircraft. This is similar to hire purchase, which is a type of asset finance that allows you to own the asset at the end of the contract, after paying a final option to purchase fee.

The advantage of an aircraft loan is that you can own the aircraft at the end of the contract, and you can choose the deposit and the duration of the contract to suit your budget. You also have the option to settle the loan early, by paying the outstanding balance and a small fee. The disadvantage is that you have to pay interest on the loan, and you do not own the aircraft until you make the final payment.

The final payment is usually the same as the monthly instalment, plus a £10 option to purchase fee. This fee is a legal requirement, and it transfers the ownership of the aircraft from the lender to you.

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Aircraft loans and aviation finance may have some differences from hire purchase and asset finance, such as:

  • The interest rate may vary depending on the type and age of the aircraft, the loan amount, the deposit, and the credit history of the borrower.
  • The lender may require an aircraft appraisal, valuation, and insurance of the aircraft before approving the finance.
  • The lender may have a lien or charge over the aircraft as security for the loan, which means that they can repossess it if the borrower defaults on the payments.
  • The borrower may have to register the aircraft with the relevant authorities and comply with the aviation laws and regulations.

Please note that these are general guidelines and the specifics can vary based on the lender’s policies and the aviation regulations in your country. Always consult with a financial advisor or legal expert before making any decisions

Additional Aviation Finance Options

Hire Purchase with Balloon Payment

Hire purchase with balloon payment is similar to an aircraft loan, but with a twist. Instead of paying equal monthly instalments, you pay lower monthly instalments and a larger final payment, known as the balloon payment. The balloon payment is usually 25% to 50% of the purchase price of the aircraft, and it is agreed upon at the start of the contract.

The advantage of hire purchase with balloon payment is that you can have lower monthly payments than an aircraft loan, and still own the aircraft at the end of the contract. You also have the option to refinance the balloon payment, or trade in the aircraft for a new one.

The disadvantage is that you have to pay more interest than an aircraft loan, and you have to save up for the balloon payment or find another source of finance. The balloon payment is usually the same as the agreed percentage of the purchase price, plus the nominal fee that is added to the final payment. This fee is a legal requirement, and it transfers the ownership of the aircraft from the lender to you.

Contract Purchase

Contract purchase is a leasing option, where you pay a deposit and monthly instalments, based on the depreciation and the residual value of the aircraft. You do not own the aircraft, but you can buy it for the residual value, return it, or part-exchange it at the end of the contract.

Contract purchase has lower monthly payments and less upfront cost than other finance options, but no equity and possible extra charges for exceeding usage limit, or any damage or wear and tear.

At the end of the contract, you have three options. You can either buy the aircraft for the residual value, return it to the lender and walk away, or part-exchange it for a new one or use any equity as a deposit.

Personal Contract Purchase (PCP)

PCP is a flexible leasing option, where you pay an initial payment and lower monthly instalments, based on the depreciation and the residual value of the aircraft. You can own, return, or part-exchange the aircraft at the end of the contract, by paying, avoiding, or using the residual value as a deposit. PCP has lower monthly payments and more options than contract purchase, but higher interest and a large final payment.

Popular Models of Private Jets you can Buy on Finance

Now that you understand the different ways to finance an aircraft in the UK, you might be wondering what types of private jets you can buy on finance. The good news is that you can find almost any model of private jet on finance, as long as it is within your budget and meets the lender’s criteria.

However, some models are more popular and available than others, depending on the demand, supply, and market trends. Here’s a brief overview:

Table

Model

Description

Price Range (£)

Estimated Monthly Payment (£)

Piper PA32RT-300

A single-engine aircraft known for its reliability and performance. It’s a popular choice for both personal use and flight training.

£90,000

Varies based on terms of the loan

Gobosh G700S

A light sport aircraft that’s easy to handle and maintain, making it a great choice for new pilots or those looking for a cost-effective option.

£62,000

Varies based on terms of the loan

Cessna Citation CJ3

A light business jet that is known for its speed and range. It’s a popular choice for business travel.

£4,000,000

Varies based on terms of the loan

Embraer Phenom 300

A light jet that offers a balance of comfort, performance, and operating cost. It’s often used for both personal travel and business purposes.

£6,000,000

Varies based on terms of the loan

Bombardier Challenger 350

A super-midsize business jet known for its wide cabin and smooth ride. It’s a popular choice for long-range travel.

£16,000,000

Varies based on terms of the loan

Gulfstream G550

An ultra-long-range business jet known for its range, speed, and luxurious interior. It’s often used for transcontinental flights.

£33,000,000

Varies based on terms of the loan

Additional Costs of Owning an Aircraft

Owning an aircraft can be a significant financial commitment, so you should carefully plan your budget and compare the different finance options available. You should also consult with a professional aircraft broker, who can help you find the best aircraft for your needs and negotiate the best deal for you.

At Clifton Private Finance we can help. With over 20 years of experience and access to exclusive lenders and rates, we’ll offer you expert advice, tailored solutions, and a hassle-free service. Contact them today and get your dream aircraft on finance.

Besides the purchase price and the finance cost, you should also consider the costs of owning and operating an aircraft, which can vary depending on the size, type, and condition of the aircraft. Some of the main costs include:

  • Hangar fees: You have to pay these fees to store your aircraft at an airport. They can range from £200 to £2,000 per month, depending on the location, facilities, and availability.
  • Maintenance fees: To keep your aircraft in good shape and working order, you need to pay these fees. They can include cleaning, servicing, repairing, and replacing parts. They can range from 10% to 15% of the purchase price per year.
  • Insurance fees: These fees protect your aircraft from damage, theft, or liability. They can depend on the value, age, and usage of the aircraft, as well as the coverage and deductible you choose. They can range from 1% to 4% of the purchase price per year.
  • Fuel fees: These fees power your aircraft, whether it is jet fuel or avgas. They can depend on the size, speed, and efficiency of the aircraft, as well as the distance and duration of your flights. They can range from £500 to £5,000 per flight.
  • Crew fees: These fees cover the hiring and managing of the crew for your aircraft, such as the pilot, co-pilot, and flight attendant. They can depend on the number, qualification, and experience of the crew, as well as the benefits you provide. They can range from £30,000 to £200,000 per year.

Importantly, these are general guidelines and examples. When it comes to your own aviation financa and the costs involved, the specifics will vary based on the aircraft’s specifications and the aviation regulations in your country. Always consult with a financial advisor, such as us at Clifton Private Finance, or a legal expert before making any decisions. 

What Happens at the End of an Aviation Finance Plan?

Aviation finance is a type of finance that allows you to use the aircraft as an asset for your business or personal use, while paying a fixed monthly fee to the lender. Aviation finance can be either a finance lease or an operating lease, depending on whether you want to own the aircraft at the end of the term or return it to the lender.

At the end of an aviation finance plan, you have different options depending on the type of lease you have chosen. Here are the possible scenarios:

  • If you have a finance lease, you can either pay a nominal fee to the lender and own the aircraft, sell the aircraft to a third party and keep most of the proceeds, or extend the lease for another term at a reduced rate.
  • If you have an operating lease, you can either return the aircraft to the lender and pay any excess usage or damage charges, buy the aircraft from the lender at an agreed price, or swap the aircraft for a new one and start a new lease.

The option that you choose will depend on your preferences and circumstances. For example, if you want to own the aircraft at the end of the term, you might prefer a finance lease. If you want to have a newer and more efficient aircraft, you might prefer an operating lease.

Using a Finance Broker to Help

If you are interested in financing an aircraft in the UK, you might want to consider using a finance broker to help you with the process. A finance broker can help you find the best aviation finance option for your needs and budget, as well as negotiate the best deal with the lender. A finance broker can also advise you on the different types of aviation finance available for buying an aircraft, such as flexible terms, low deposits, and bespoke solutions.

At Clifton Private Finance, we have a team of specialist finance brokers who can help you finance an aircraft in the UK. We can work with aircraft manufacturers and dealers to arrange your aircraft finance plan and finalise your purchase. We can also help you finance new, used, or auction-bought aircrafts, and offer the most competitive aviation finance service for you.

To find out more about our finance broker service, don’t hesitate to contact us today.

We offer a free and no-obligation telephone consultation at a time that suits you.

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Frequently asked questions

You can find the most common questions asked about asset finance loans below. If you have a question that isn't answered here, please email us at commercial@cliftonpf.co.uk

Asset finance is a way of spreading the cost of equipment used by businesses over time, allowing companies to keep a strong, consistent cash flow whilst minimising upfront costs.

There are many asset finance products to choose from when considering asset finance, such as hire purchase, operating leases and finance leasing, so there are plenty of options to consider for your every business need.

The asset financing structure is the financial arrangement organised between businesses and lenders to secure funding to acquire equipment that is directly related to the operation and growth of the business.

Asset financing typically involves several key elements, which are as follows:

Assets used as collateral:

A lender will likely secure finance against the asset itself or other assets, which can be tangible or intangible.

  • Tangible Assets: vehicles, construction equipment, real estate, or inventory.
  • Intangible Assets: intellectual property, accounts receivable, revenue streams.

Types of Asset Financing:

The following is a list of several products available to business owners as options for asset finance:

Leasing: Businesses that choose to lease do not outright own the asset and pay a monthly cost to use the equipment at a much lower cost than purchasing the equipment.

Hire Purchase (HP): A standard choice for businesses, this option allows you to eventually own the asset you’re paying for after the payment period has ended.

Asset-Based Lending (ABL): A business borrows money against an asset as collateral, and it’s commonly used to acquire working capital for operational or growth needs.

Loan-to-value (LTV): The loan-to-value ratio of assets is the calculation of a percentage which helps to determine the risk of the loan itself. A high LTV ratio typically indicates a higher interest rate for businesses as it’s far riskier to finance.

A low loan-to-value ratio is generally more comfortable for lenders, lower repayment periods and lower fees ensure that the asset can be repaid easily. If an asset depreciates over time, however, and becomes under-collateral, this means that the lender wouldn’t be able to fully recover the amount owed if the asset is repossessed.

Should there be a major decrease in collateral value, lenders might seek to acquire additional collateral from the business owner, or even increase fees and interest, impacting cash flow.

Business loans are products designed for general use throughout businesses. They can be used for general business needs, including asset finance, which has the added benefit of the asset not necessarily being used as collateral for the loan itself.

Asset finance, however, is more specific: its use is for the acquisition of assets and is restricted to only that. Lenders will use the asset itself as collateral for improved lender comfort, being reclaimed in the event that you do not pay your asset finance.

One major distinction between asset finance and business loans is interest rate: asset finance interest is typically lower compared to unsecured business loan interest, which is notably higher.

Should you fail to repay your asset finance, you can face an impacted credit score and ultimately lose the asset in a repossession.

Depending on the asset you’re funding, there’s also a risk of depreciation - particular risk for vehicle finance.

In some cases, if a machine you’re financing is essential to the functioning of your business operations, then factors such as depreciation or loss of efficiency of the equipment can cause lender discomfort, leading to slightly higher interest rates.

Equipment financing is typically used by growing businesses looking to limit the impact on cash flow from an expensive piece of equipment by spreading the cost over a period of time.

Small and medium-sized businesses (SMBs) can use equipment finance to limit the loss of capital and scale up operations without a massive upfront cost to deal with. Accessing equipment finance isn’t limited to a single industry, its uses spread from healthcare with MRI scanners, to construction, manufacturing, agriculture and more.

Let us do all the hard work of finding the right product and lender for your circumstances. We secure business finance for applications of all types, and we negotiate competitive lending to meet your needs and timescales.

Book a consultation and speak to one of our experts today

Jonathan Moffatt
Head of Business Finance