Financing Options for Airplane Engines

Rebuilding your airplane’s powerplant is an investment in your aircraft.

Aircraft engines are expensive for several reasons:

  1. Aircraft engines are produced in low quantities compared to automobile engines
  2. Many of the aircraft engine’s parts are replaced at overhaul
  3. FAA regulations are very strict, requiring enhanced testing procedures during the rebuild process.

Many aircraft owners will choose to finance the rebuild of their engines. Below are several financing methods:

  • Aircraft Lender Financing – many lenders who specialize in aircraft financing will also finance engines.  Generally speaking, the aircraft’s value with a rebuilt engine will be estimated and an allowance offered. The interest rate & length of the loan are subject to the age and condition of the airplane. A lien is placed on the airplane to secure the lender’s interest. AOPA Finance is one option to consider.
  • Home Equity Line of Credit – using a home equity line of credit is another way to finance an aircraft engine. The interest rate may be lower, your monthly payment may be lower, and you will not be required to place a lien on your airplane. Consult your mortgage banker.
  • Stock Portfolio Margin Loan – a third option is to obtain a margin loan against a stock investment portfolio.  Depending on your brokerage company, up to 50% of a stock portfolio may be borrowed against. Again, the interest rate may be lower, and a monthly payment as low as just making the interest payment. Discuss this option with your portfolio broker for terms and conditions.