Key Questions to Ask About Asset-Based Loan for Private Jets

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If you are planning to buy a private jet but lack the capital, consider an asset-based loan. This particular loan type is often overlooked because the situations in which asset-based loans are used are not that common. However, a private jet purchase could be just the right situation.

Both lender and buyer might feel safer going with this loan type rather than looking for an alternative. But there is more to these loans. If you have plans to get a private jet and consider using your asset as collateral, there are a few questions worth asking.

Can I decide everything myself?

Even people with a fiscal background might have some problems figuring out asset-based loans. Unless you are someone well-versed on the topic, it would be wiser to leave most of the work in the hands of someone experienced.

Since you are planning to purchase a private jet, there will be multiple parties involved, including an aviation advisory business that will consult you on the jet intricacies, a person or institution that will lend you the money, and the seller, to name a few.

To make the process as smooth as possible, you need to cover all the bases and minimize the odds of making a mistake. After all, there is a lot of money involved in such a purchase.

How to start the process?

Securing an asset-based loan is not that different from securing traditional financing. You will need to go through specific documentation and procedures to get approved. Once things are in check, a lender will process the necessary papers and get the money.

What is the timeline like?

The timeline for the process to complete varies on multiple factors. If you want to be successful with your loan, you need to find the right help. Moreover, you should also have a good credit score. Otherwise, expect to get quite a few rejections.

What are the downsides?

As expected, asset-based loans come with certain disadvantages. If there were no downsides, it would be a more popular financing model.

Overall, determining specific downsides is not that easy, given how many different situations there are. For some people, the stress of using their assets as collateral might not be worth it if they have some uncertainties. For others, it is a stipulation for payment plans. If the terms of an agreement are not that favorable, paying money on time might prove too difficult, and that would lead to various issues.

Discussing potential problems with a specialist is a good piece of advice before you commit to an asset-based loan.

How to determine loan terms?

Loan terms differ depending on what you plan to get. When it comes to private jets, there are 5 things that stand out:

  • The total amount
  • Down payment
  • Age and history of the plane
  • Make, model, and plane’s condition
  • Your intended use
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How to find a good lender?

The right lender is not that easy to find. Even if it takes time, you should be careful not to end up with someone that will cause you more problems than do good. Remember that you are putting a lot on the line and that the lender should be someone who helps you and not takes advantage of your situation.

Ideally, you should have someone to recommend you a lender. If you trust a person and their judgment, then they can push you in the right direction.

On the other hand, if you do not know anyone who had prior experience with asset-based lenders, look for some online reviews. At the end of the day, it is a lender’s reputation that matters the most, and you can get a good idea of a lender’s reputation by checking various comments online.

Once you have a list of potential lenders, speak to them and see how they act. Getting more personal and judging their character should also come in handy when you want to pick a lender.

Where can one get asset-based financing?

It is worth noting that banks are unlikely to offer asset-based loans, though it varies depending on where you live. Regardless, a bank should still be your first option. Visit one and see whether they offer the service. If not, you can expect them to point you in the right direction. Or, as an alternative, use the internet to look for an available lender in your area.

Is an asset-based loan the right option for me?

You should also ask yourself whether this particular financing option is the best. If you have no other choice but to use personal assets as collateral to get a private jet, and you believe that things will work in your favor, then there is little to worry about.

On the other hand, if you are on the fence about picking between asset-based loans and other loan types, then take as much time as you need to determine which method suits you the best.


Also published on Medium.

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