We take flying for granted nowadays and it is even the case that many people in big business have personal planes to get them across the country.
Understandably aircrafts are very expensive and even large airliners may at time struggle to buy them outright so need to find ways to finance their Purchase of Aircrafts. This is done in the form of a lease.
There are a number of different ways the aircraft can be financed. Firstly is the lease. This way the aircraft is purchased and owned by a third party. The airline pay an arranged amount each month and there is a major advantage for them doing business this way. As long as the aircraft is only used for business purposes – and with most airlines this will be the case – tax does not have to be paid on the repayments. Once the end of the agreement for thePurchase of Aircrafts is reached a pre determined residual payment is made and the airline then owns the aircraft. If the airline cannot do this they can arrange further finance to pay off the final amount. There are clearly good points to this system as there is a tax advantage but the down side is that the airline don’t own the aircraft and also have to find a final pay off.
Hire purchase options are available but these are not as popular as they once were. When the lease arrangement came available less people wanted to hire as the airlines were concerned that they did not actually own the aircraft until the final payment had been paid. There is a balloon payment at the end which helps to reduce the monthly repayments but there is always the knowledge that the final payment has to be found. The good side of this is that the airlines involved in the Purchase of Aircrafts know how much they have to pay each month but the downside is the balloon payment.
Chattel mortgages are also an option. This works in much the same way as a household mortgage in as much as there are pre determined payments although this also has the option of a balloon payment. Tax can again be claimed back and as a result of that this is becoming a more popular solution. This system has many advantages and works well for the airlines. They get the tax breaks as they do with other systems and have the choice of a balloon payment while the downside is the depreciation of the aircraft over the period of the mortgage.
For airlines involved in the Purchase of Aircrafts to keep their fleet up to date there are some good choices.
If you are looking for aircraft finance, then you have chosen the right place. Pay a visit to our website and get a quote from a leading broker.