Glider Financing

[Dan Marotta]

Just saw that AOPA is going to broker aircraft financing. Don't know if/how
that will work for gliders, but here's a link to their article:

http://www.aopa.org/News-and-Video/All-News/2013/June/3/AOPA-makes-financing-easier-for-members.aspx?WT.mc_id=130607epilot&WT.mc_sect=gan

Since I'm not in the market, I did not investigate, but some may be
interested.

Dan

[noel.wade]

Called AOPA last Thursday - and nope, none of their financing partners can do gliders at present. They claim that if more people start requesting it, they may be able to make it happen; but not immediately.

Sad, really - and IMHO one more reason the sport isn't growing here. A person looking for a hobby can finance a boat, an RV, a snowmobile, a motorcycle, or an airplane on MUCH friendlier terms than a glider. So that limits the pool of private owners to fanatics like me or older folks who've had time to build up a lot of home equity or other large financial resources.

And this doesn't just impact buyers. It also makes it harder for every one out there that has a sailplane and hopes to sell it someday.

--Noel

[waremark]

In the UK it is normal for gliders to be shared between syndicates of 2 or 3 members. A syndicate of less prosperous members might buy an older glider for 8,000 dollars, and for a third of that a syndicate member can have as much fun flying as a prosperous pilot who invests 400,000 dollars in the latest supership. So pilots invest whatever they can afford. I have not heard any private owners talk about taking finance on a glider.

[son_of_flubber]

On Monday, June 10, 2013 3:35:27 AM UTC-4, waremark wrote:
> In the UK ... I have not heard any private owners talk about taking finance on a glider.

I believe that that is true for many cases in the USA, but the younger cohort that is in line to buy used gliders from the baby boomers, is not so affluent. The baby boomers are hoping that the new buyers will finance their purchases, otherwise there will be a shortage of buyers and a radical drop in prices.

The good news is that folks will probably be able to buy a well maintained 1:40 glider for $10,000 10 years from now. Wearable avionics should drop in price as well.

[Clay]

I suspect most buyers of, say, a Porsche 911 are leasing or financing. They are not paying cash and are not buying as part of a syndicate. All Noel is saying is we should be able to do the same. I entirely agree and thank him for fighting the good fight. Clay

[gregg...@gmail.com]

With financing you'd still have to be a fanatic to make mortgage sized payments on a low utility fringe toy.

[Dan Marotta]

I owned *TWO* LS-6s in separate partnerships. In both cases it worked out
well. Just be sure you know and respect the person you join up with and
have a complete understanding of expectations. Those partnerships got me
650 hours in a ship I could not afford by myself at the time.

Dan

<gregg...@gmail.com> wrote in message
news:28ece26b-9489-49bc...@googlegroups.com...

[cochra...@gmail.com]

The best way to borrow money to finance a glider is to take out a home equity loan or refinance your mortgage -- a good idea anyway as unbelievably low interest rates can't last forever.

John Cochrane

[Clay]

On Monday, June 10, 2013 11:30:49 AM UTC-4, cochra...@gmail.com wrote:
> The best way to borrow money to finance a glider is to take out a home equity loan or refinance your mortgage -- a good idea anyway as unbelievably low interest rates can't last forever.
>
>
>
> John Cochrane

Yes, but the spouse would have to co-sign I believe, putting their equity at some risk (minimal I know). That conversation would be interesting (and quite loud), to put it mildly, in my household.

[Echo]

I initially financed through the Lea County people in Hobbs. Glad the option was there, but the terms were rough. I then took my case to my employer's credit union, where it was turned down. Even though they serve aviation professionals, they told me they don't do sailplanes. I briefly considered calling it a boat like the old days of glider financing (It's a sail[mumble], made out of fiberglass, and comes with a trailer. Then I decided to build my case for my credit union, and had a valuation assessment done by one of the repairshops that imports and had specific experience with my bird. After a long process, and agreeing to use the trailer as part of the collateral with the glider, I ended up with 2.99% and a new respect for credit unions' willingness to work something out. Have since moved all my stuff away from big bank and over to them.

Jordan
ASW20 E

[noel.wade]

On Jun 10, 8:30 am, cochranejo...@gmail.com wrote:
> The best way to borrow money to finance a glider is to take out a home equity loan or refinance your mortgage -- a good idea anyway as unbelievably low interest rates can't last forever.
>
> John Cochrane

John -

This is true; but again you're limiting your potential buyers to
homeowners who ALSO happen to have a good amount of equity. That
right there is tough enough, in the wake of the financial crisis/
housing-market implosion (even if you bought near the bottom, as I
did). Furthermore, home loans are tougher now. Equity is typically
capped at 80% of property value, and then your mortgage amount is
deducted from that.
Example time:
-----
$30,000 glider at 80% financing means you need to get a loan of about
$27000 ($24k + a few for fees, taxes, and escrow).
Let's also say you bought a $300,000 house for 10% down (5% - 15% is
fairly common these days, given that its hard for people to save
$60,000+ for their first home).
Since your home-equity is capped at 80% of $300,000 (i.e. $240,000)
you need your mortgage balance to be $213,000 in order to have enough
useable equity.
On a 30-year 3.75% fixed-interest mortgage, you have to be in month
117 to have paid off that much.
That's _9.75 YEARS_
-----
So, before someone can get a loan to buy their first $30,000 glider
(LS-4, DG-300, ASW-19/20, etc) they have to buy a home and make
payments for ~10 years. Again, I state: That's ridiculous, in terms of
the portion of the US population that you've excluded.

I don't want to sound harsh, but perhaps those of you in your 50's and
60's in this sport need to look around at the economics of the times
(OK, everyone but John Chochrane; since that's his day-job)... With
wage-growth (or lack thereof) and home-prices being pumped back up to
higher levels, this is not a reasonable path to glider ownership for
_most_ people in their 20's or 30's. You're cutting out a huge portion
of the demographic - many of whom are having fewer kids and waiting
longer to get married (and thus _could_ participate actively in the
sport even at that age, if they could obtain decent financing to
spread the acquisition costs out).

YES, you can do syndicates or partnerships. But imagine what the
Boat, ATV, Motorcycle, or RV markets would look like if that was the
main path to ownership for those items? Or heck, even the propeller-
airplane market?

I've been continuing to raise this publicly because I was half-
expecting someone to stand up and tell me I'm dumb and this subject
has already been resolved, and I was just unaware of the resolution. I
mean, if this situation existed in the powered-airplane world, the
AOPA and EAA (and airplane manufacturers) would've resolved with
gusto. It just seems like an obvious situation/problem that the glider
community would be interested in improving (especially for everyone
who owns a glider and wants to be able to sell it someday).

--Noel

[cochra...@gmail.com]

>
> --Noel

Noel: No disagreement, actually. A glider is durable and fairly easy to sell, so we should be able to borrow to finance them at reasonably low rates. (For those who don't have home equity or other resources.) I presume it's just so small a market that nobody other than Lea County Bank has developed the expertise.

Maybe you should start a pilot's credit union, or similar business supplying glider loans? There are also a lot of wealthy glider pilots who understand a glider is good collateral and might want to earn more than the pitiful returns offered by bond markets these days.

The glider-backed security, latest wall street fad... Seriously now.

John Cochrane

[noel.wade]

On Jun 11, 7:41 am, cochranejo...@gmail.com wrote:
> > --Noel
>
> Noel: No disagreement, actually. A glider is durable and fairly easy to sell, so we should be able to borrow to finance them at reasonably low rates. (For those who don't have home equity or other resources.) I presume it's just so small a market that nobody other than Lea County Bank has developed the expertise.

I know I'm verging on beating a dead horse here; but what I find
fascinating (and frustrating) is that the "expertise" is _no_
different than most other aircraft loans... So there should be
_several_ companies that have the necessary expertise (its not like
Escrow or Title Searches or FAA Forms are different when its a
glider)! Its just weird...

--Noel

[son_of_flubber]

On Tuesday, June 11, 2013 11:31:25 AM UTC-4, noel.wade wrote:
> Its just weird...

My uncle who flew "the hump" in WWII: "Why would you take the engine out of a perfectly good airplane?"

A lot of people think that gliders are "wierd".

[Ramy]

Many credit cards offers zero percent interest for 1 year. You can finance your glider using credit cards and transfer the balance to another credit card when the introduction rate expires. That's how I paid for my first glider , with zero percent credit cards and low monthly payments. This requires discipline, and good credit rating.

Ramy

[noel.wade]

On Jun 11, 9:37 am, Ramy <ryan...@yahoo.com> wrote:
> Many credit cards offers zero percent interest for 1 year. You can finance your glider using credit cards and transfer the balance to another credit card when the introduction rate expires. That's how I paid for my first glider , with zero percent credit cards and low monthly payments. This requires discipline, and good credit rating.
>
> Ramy

...And a credit card with a limit of $20k - $40k. Again, this is a
possible solution but _not_ one that the general public can take
advantage of!

--Noel

[Paul Cordell]

A Long long time ago I approached my employers Credit Union to finance a Sailplane. This well known Seattle Aircraft Manufacturers Credit Union bluntly told me that they don't finance Aircraft.....

[Kevin Finke]

Paul, that's funny.

Since then they do now finance aircraft, but not sailplanes. It was
really kind of funny because the Everett Branch had a sailplane
hanging in the lobby with a picture of it flying down below and an
advertisement saying that they now offer aircraft financing. I pursued
them for my first glider purchase and got as far as the question "How
much horsepower?" and when I said zero, they looked at me weird, and
said they don't finance aircraft without engines. I tried to call them
out on it's still an aircraft per the FAR's, and you advertise
aircraft financing.

My honest guess is they are using prepackaged financing software where
the horsepower of the aircraft somehow relates to it's value, and when
they can't put a number in it, they just freak.

-Kevin

[Tony]

On Tuesday, June 11, 2013 12:09:08 PM UTC-5, Kevin Finke wrote:
> Paul, that's funny. Since then they do now finance aircraft, but not sailplanes. It was really kind of funny because the Everett Branch had a sailplane hanging in the lobby with a picture of it flying down below and an advertisement saying that they now offer aircraft financing. I pursued them for my first glider purchase and got as far as the question "How much horsepower?" and when I said zero, they looked at me weird, and said they don't finance aircraft without engines. I tried to call them out on it's still an aircraft per the FAR's, and you advertise aircraft financing. My honest guess is they are using prepackaged financing software where the horsepower of the aircraft somehow relates to it's value, and when they can't put a number in it, they just freak. -Kevin

you just need a motorglider...

[Dan Marotta]

Did we decide not to explore parterships or syndicates?

Back in '92 two of us sold our gliders (an ASW-19 and a G-102) and bought an
LS-6a which neither of us could have afforded alone. With the sale of the
two gliders, he was set and I had to add $500. We drove together from
Denver to Chicago to pick up our purchase and we had a great time for the
next 5 or 6 years.


"Paul Cordell" <pcor...@gmail.com> wrote in message
news:87b99b1b-223d-4ead...@googlegroups.com...

[noel.wade]

Dan -

This is not about "ways to finagle glider ownership".

It's about this being another barrier to entry in a sport that has too many already. It's about a ridiculous situation that doesn't exist for almost any other type of recreational vehicle. There is NO REASON why a person should be forced into any of these "alternate solutions", just to try to accomplish what any Joe-Schmoe can already do with a car, airplane, motorcycle, boat, or RV.

--Noel

[Dan Marotta]

Thanks, Noel. I guess I lost track of the original intent.

I recall my first experience with gliding when my brother invited me to try.
My initial response was, "What good is an aircraft without and engine?"
That was some 28 years ago and I haven't looked back since.

I guess the banks haven't caught on, either. But if you really want to fly,
there are always ways to accomplish that.

Dan


"noel.wade" <noel...@gmail.com> wrote in message
news:6eca4e78-2528-4acd...@googlegroups.com...

[Bill D]

On Tuesday, June 11, 2013 11:45:07 AM UTC-6, noel.wade wrote:


> It's about this being another barrier to entry in a sport that has too many already. It's about a ridiculous situation that doesn't exist for almost any other type of recreational vehicle. There is NO REASON why a person should be forced into any of these "alternate solutions", just to try to accomplish what any Joe-Schmoe can already do with a car, airplane, motorcycle, boat, or RV.

> --Noel

Of course, you're right. You've hit on a obstacle to growth. So, what can we do about it? I don't think financial institutions "hate" us as much as they're ignorant of us. Like most people, they react negatively to things they don't understand.

Lea County State Bank obviously thinks it's good business for them. That's something we might try to replicate through education of bankers. Given a workable plan, I'm sure the SSA Growth and Development Committee would consider undertaking the task.

[Bill D]

Answering my own post after a bit of research.

There is the American Bankers Association with a publication, "ABA Journal". Perhaps we have someone with enough financial credibility (John Cochrane?) to write an article about a new banking opportunity financing gliders. "No defaults in 50 years" sound pretty convincing to me.

[Peter von Tresckow]

So what kind of terms does Lea County Bank offer? Do they do small loans? A
friend of mine was looking at possibly buying a small taildragger <30k, and
most banks said they don't do small loans. They would gladly loan him
80-100k but nothing small.

Pete

[noel.wade]

> So what kind of terms does Lea County Bank offer? Do they do small loans? A
> friend of mine was looking at possibly buying a small taildragger <30k, and
> most banks said they don't do small loans. They would gladly loan him
> 80-100k but nothing small.
>
> Pete

Peter -

There are dozens of aircraft finance outfits around the country. Just
Google "Aircraft Loan" and you'll find several. Or call AOPA and ask
for their new aircraft finance division. They'll happily do loans of
that size (as long as the airplane isn't registered as a glider). :-P

--Noel
P.S. I'm about to get a call back and an answer on LCSB's current
terms. But when I checked a couple of years ago they were not all that
good...

[noel.wade]

Bill -

My plan is to get all the details from LCSB and then go back to the
AOPA Aircraft Finance guy. I'll lay it out to him and let him know
that ANY aircraft finance company out there could dominate the market
if they offered slightly longer terms or a 1% lower interest-rate than
LCSB. We'll see where it goes. Personally, I don't think the SSA has
positioned itself to have _any_ clout with banks or finance companies
or anything; AOPA/EAA seem like a much better bet when it comes to
this sort of issue.

--Noel

[son_of_flubber]

On Tuesday, June 11, 2013 3:06:39 PM UTC-4, noel.wade wrote:
> I'll lay it out to him and let him know
> that ANY aircraft finance company out there could dominate the market
> if they offered slightly longer terms or a 1% lower interest-rate than
> LCSB.

Not that I think your plan would work, but helping to kill LCSB's glider loan business to get slightly better terms from a "big aircraft finance company" just so that big company can decide a few years later to STOP financing gliders sounds like the wrong plan. Big companies are rarely interested in small and shrinking opportunities.

The status quo is better than no quo.

[Bob Whelan]

Apparently it's difficult to obtain financing on pricey glider toys whose
owners rarely default when financing actually was available and obtained. I
agree this is a(n unfunny) ludicrous situation and definitional business
opportunity in our declining bastion of free market competition.

But - apologies up front for thread drift - all seems not yet lost.

Today's mail included a flier from Dell in which I learned I can finance a
$3,200.00 computer, pay only $96 per month, and actually own the computer in...
.
.
.
.
.
.
.
.
.
.
. ...*31 years* with a total cash outlay of only $15,903.22. Is America a
Great Country or what?!?

Bob - sorry Noel, it was too good to not share! - W.

[Bill D]

Noel, I think the only thing AOPA/EAA will do is cut off glider loans in hopes we come to our senses and start flying airplanes. The airplane guys just think we're weird. A far better business relationship would be with a bank who finances jet skies.

[noel.wade]

On Jun 11, 12:26 pm, son_of_flubber <row...@gmail.com> wrote:
>
> The status quo is better than no quo.

Yes, because fear and uncertainty is the best way to grow the sport!

C'mon, you mean to tell me that the only way LCSB can make money on
this is by being a monopoly? Hogwash. The status-quo _IS_ "no quo"!
See my next post, with the actual loan terms from LCSB.
(SPOILER ALERT: They're not really much better than a "Personal"/
Unsecured loan - the loss of LCSB would not dramatically change
anything.)

--Noel

[noel.wade]

LCSB Loan terms:

7 years, 8% - 10% fixed rate
OR
7 years, variable interest at Prime + ~3.5% (currently just over 6%).

I'm sorry, but this is crap compared to airplane finance companies who
are offering 7-15 year terms (20 years if you buy something "big") and
_fixed_ interest rates in the 4% to 6% range.

Personal loans from Banks and Credit Unions are typically in the 6% -
10% range and up to 5 years (with 7 years available in a few cases).

Sooooo, LCSB is charging what you'd expect for an unsecured (personal)
loan but they get the benefit of having collateral (and the buyer has
the hassle of a lien on the title to manage). They seem like nice
people at LCSB, but really this is _NOT_ a good deal for buyers at
all.

--Noel

[Rob Brown]

On 2013-06-11, Bill D <bil...@comcast.net> wrote:
>
> Noel, I think the only thing AOPA/EAA will do is cut off glider
> loans in hopes we come to our senses and start flying airplanes.
> The airplane guys just think we're weird. A far better business
> relationship would be with a bank who finances jet skies.

What's a jet sky?


--

Rob Brown mylas...@gmcl.com