Aircraft refinancing replaces an existing aircraft loan with a new one, usually to lower the rate or payment, change the term, or take cash out against equity. It makes sense when the savings recover the closing costs well before you plan to sell the aircraft.
Who is it a good fit for?
- Rates have dropped since you borrowed
- Your business or credit profile has improved
- You need cash for an engine overhaul, avionics or expansion
When might another structure be better?
- You plan to sell the aircraft before the savings cover the costs
- Prepayment penalties wipe out the benefit
Rate-and-term vs cash-out
A rate-and-term refinance changes only the rate or length of the loan. A cash-out refinance borrows more than you owe and pays you the difference, using equity built up in the aircraft. Lenders usually set lower maximum advance rates for cash-out loans.
Check the breakeven
Divide the total refinancing cost by the monthly savings to get the breakeven in months. If you will keep the aircraft well past that point, the refinance likely pays off. The refinance calculator does this math for you.
Aircraft Refinance Calculator
Monthly savings and breakeven on closing costs.
