An aircraft finance lease, sometimes called a capital lease, is a lease designed to end in ownership. You make lease payments over the term and buy the aircraft at the end, often for a nominal or preset price, so it behaves much like a loan with lease paperwork.
Who is it a good fit for?
- You want ownership but need lower entry cash than a loan
- The aircraft will be core to the operation
- A lessor offers better terms than lenders for your profile
When might another structure be better?
- You want to hand the aircraft back
- You want the lessor to carry value risk
How a finance lease works
A finance lease transfers most of the risks and rewards of ownership to you. Payments are set to recover most of the aircraft cost, and the end-of-term purchase price is fixed in advance. Some are written with a one-dollar buyout; others use a set percentage of the original cost.
Finance lease or loan?
Economically they are close. A finance lease can need less cash up front, and some lessors are more flexible than banks on newer operators. Accounting and tax treatment can differ, so involve your accountant before choosing.
Aircraft Lease vs Finance Calculator
Total cost of leasing versus buying over the same term.