Jet Financing: How Business Jet Loans and Leases Work

The short answer

Jet financing usually means a secured loan, a finance lease, an operating lease or a sale-leaseback on a business jet. Lenders underwrite the aircraft (age, type, engine program, condition and expected resale value) and the borrower (financial strength, intended use and ownership structure). AOPA Aviation Finance describes standard turbine terms as a 15-year amortization with a 5-year term and down payments that could be as low as 10%, depending on the aircraft.

Key takeaways

A loan or finance lease leaves residual value risk with you; an operating lease or sale-leaseback shifts it to the lessor.
Lenders interviewed by AvBuyer called an hourly engine maintenance plan close to non-negotiable, though some accept a reserve-funded deferred plan.
Down payment and term depend on the aircraft's age, make and model and on how it will be used.
A pre-purchase inspection is expected on used jets, and ownership structure and operating rules are reviewed before approval.
Compare structures on the same aircraft and hours, and confirm tax and legal points with your own advisors.

How does jet financing work?

Jet financing is the set of ways to pay for a business jet without paying all cash: a secured loan, a finance lease, an operating lease, or a sale-leaseback of a jet you already own. In each case the lender or lessor takes the aircraft as collateral or owns it outright, so the first question they ask is what the jet is worth and how well it will hold that value.

AvBuyer's 2020 overview lists five funding routes for business aircraft: cash, bank debt, lessors and finance companies, export credit agencies and capital markets, with manufacturer support also available. Most operators buying a light, midsize or large jet deal with the first three. This guide covers the structures; our corporate aircraft finance options guide adds shared ownership and the FAA operating rules.

Which structure fits: loan, finance lease, operating lease or sale-leaseback?

Jet financing structures compared
Structure	Who owns the jet	Residual value risk	Typically suits
Secured loan	You (lender holds a lien)	You	Long-term use, ownership and depreciation
Finance lease	Lessor, then you at the end	You	Ownership by lease terms, often with a buyout
Operating lease	Lessor	Lessor	Fixed cost, flexibility to change aircraft
Sale-leaseback	Lessor, after buying from you	Usually lessor	Releasing equity from a jet you own

AvBuyer notes that bank lending is typically asset-backed, with the aircraft as collateral, and that operating leases can finance 100% of the asset while shifting residual value risk to the lessor. Business Jet Traveler observed that you can take depreciation only on an aircraft you own, which is one reason buyers weigh a loan against a lease. Depreciation depends on your own tax facts, so ask your tax advisor.

For deeper comparisons see acquisition loans, finance leases, operating leases and the operating vs finance lease guide. If you already own the jet, read how sale-leasebacks work.

Does financing differ for light, midsize and large jets?

The structures are the same, but underwriting shifts with the aircraft. AOPA Aviation Finance says the down payment and terms are driven by the aircraft's year, make and model. AvBuyer reported in 2022 that PNC weighs age, cabin size, operating, damage and corrosion history, production status, operating location, annual hours and planned use, and that 1st Source may require more equity for a larger cabin. Lenders may also set hard limits on aircraft age and annual usage.

Light jets (for example the Cessna Citation CJ3 or Embraer Phenom 300): the deepest used market among jets, so resale evidence is easier to document. Check each model's engine program options and production status.
Midsize and large jets: higher values, more complex maintenance and a thinner buyer pool for some types. Expect lenders to look harder at the engine program, operating history and exit plan.

Neither source gives a fixed rule by jet class, so ask each lender for its criteria on your specific model before you spend on inspections.

What do jet lenders check?

Lenders review both the aircraft and the borrower. The common items reported by AOPA and AvBuyer are:

Engine program. AOPA says most lenders require one, with some exceptions. AvBuyer's 2022 piece called an hourly plan virtually non-negotiable among lenders interviewed, though 1st Source may finance a deferred-maintenance plan when the buyer holds reserves for the next major engine event, and PNC accepts a partial plan.
Age, hours and condition. AvBuyer's 2020 article said lenders favor low-hour or mid-time engines, that airframes over 5,000 hours can be hard to finance and that older aircraft may get shorter terms. See financing a used aircraft.
Inspection. AvBuyer states a pre-purchase inspection is mandatory for pre-owned aircraft. Read what a pre-buy should cover.
Value. Residual value drives advance rates and term. Business Jet Traveler reported some banks lent against an estimated market value lower than the price paid. See why lenders care about residual values and what an appraisal covers.
Use. AOPA lists Part 91 and Part 135 use as acceptable. PNC told AvBuyer it generally does not finance purely Part 135 charter use but accepts occasional charter to offset costs. Heavy-use operations, per AvBuyer, may face shorter amortization and larger down payments.
Borrower finances. AvBuyer's 2020 article says lenders may ask for three years of audited statements and up to 10 years of projections, plus bank and supplier references, and they assess total debt service including balloons.
Filings. AOPA says most lenders will require International Registry filings if the airframe or engines qualify, and AvBuyer notes lenders favor jurisdictions that have joined the Cape Town Convention.

What loan terms and down payments are typical?

For turbine aircraft, AOPA Aviation Finance describes standard terms as a 15-year amortization with a 5-year term, a down payment that could be as low as 10% depending on the aircraft, and the process taking about 30 days from start to finish. It also cites up to 20-year terms and up to 85% loan-to-value for customized structures. AvBuyer in 2020 described financing up to 10 years with 5 to 7 more typical, down payments of roughly 15 to 18% for medium-to-low credit risk and 30% or more for higher risk. Those are published indications from named sources, not quotes, and AvBuyer notes a term-sheet rate is only indicative unless an all-in rate is confirmed. PNC told AvBuyer in 2022 that most business jets are resold or refinanced every 42 to 54 months, so it aims to retire debt in about four years.

A short term on a longer amortization leaves a balloon payment at maturity, which you must refinance, pay or sell against. Our guide to balloon payments on aircraft loans explains the risk and aircraft loan down payment requirements goes deeper on equity.

What does a jet loan payment look like? (hypothetical)

The numbers below are hypothetical, chosen only to show the math. They are not a quote and do not reflect any lender's terms.

Purchase price (hypothetical)$6,000,000

Down payment, 20%$1,200,000

Amount financed$4,800,000

Rate (assumed), amortization, term7.00%, 15 years, 5-year balloon

Monthly paymentabout $43,144

Paid over 60 monthsabout $2,588,600

Balloon due at month 60about $3,715,800

Most of the early payment is interest, so after five years the balance is still about 77% of the amount financed. The lender will also want the jet's value at month 60 to cover that balloon with room to spare, which is why engine program status and condition matter. Run your own figures in the aircraft loan calculator, and compare leasing in the lease vs finance calculator.

What should you do before you apply?

Decide how the jet will be used and operated (Part 91, occasional charter or Part 135) because it changes lender appetite.
Confirm the engine program status and its transfer cost before you make an offer.
Choose a structure with your tax advisor and aviation counsel, including who owns the aircraft and who has operational control under rules such as 14 CFR 91.501.
Gather financial statements, an aircraft summary and a pre-buy plan. The financing preparation checklist lists the documents.
Get quotes from lenders and lessors on the same aircraft, hours and use, and compare the balloon or return obligations, not just the payment.

NBAA also reminds operators that a lease is a transfer without title and that adding crew to a lease makes it a wet lease generally requiring an FAA commercial certificate, so structure leases carefully. This article is general information, not tax or legal advice. When you are ready to compare structures on a specific jet, you can start a deal file with JetFinex. The corporate aviation guide lists what lenders ask business aircraft borrowers for.

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Frequently asked questions

How do you finance a private jet?

Most buyers use a secured aircraft loan, a finance lease or an operating lease, or sell an aircraft they own to a lessor and lease it back. The lender or lessor reviews the aircraft, the engine program, the intended use and the borrower's finances before approving.

How much down payment does a business jet loan need?

It depends on the aircraft. AOPA Aviation Finance says the down payment is set by year, make and model and could be as low as 10%. AvBuyer in 2020 cited roughly 15 to 18% for medium-to-low credit risk and 30% or more for higher risk.

Do lenders require an engine program on a jet?

Usually. AOPA says most lenders require one with some exceptions, and every lender AvBuyer interviewed in 2022 treated an hourly engine plan as virtually non-negotiable. Some lenders accept a deferred plan if reserves cover the next major engine event.

Can I finance a business jet that is also chartered?

Sometimes. AOPA lists Part 91 and Part 135 use as acceptable, but PNC told AvBuyer it generally does not finance purely Part 135 charter use while accepting occasional charter to offset costs. Disclose planned use early.

Is leasing a jet cheaper than buying it?

Not automatically. An operating lease can lower upfront cash and pass residual value risk to the lessor, but you give up ownership upside and must meet return conditions. Compare total cost over your expected holding period. See the lease vs buy guide.

Sources

This guide is educational and is not tax, legal or investment advice. See our editorial standards and disclosures. Spot an error? Tell us.