Shopping for a Loan?
Save Time and Money with the Right Broker
By Dan Garzelloni, Mile High Finance Corp.
Chances are that most of us have purchased a home. It’s also likely that you’ve refinanced that home at some point. When you went shopping for a mortgage, you most likely worked with a Mortgage Broker. When you secured insurance for your aircraft, you probably worked with an Independent Insurance Agent. When you leased equipment for your business, there’s a good chance that you worked with a Lease Broker.
As you probably know, all three of these businesses don’t actually provide the funds that pay for the services they provide. Instead, they’re independent of the actual underwriters. Aircraft Finance Brokers are no different and they all have one thing in common—they typically have a well-rounded knowledge of their industry, and most importantly, they have established relationships with several banks, lenders, or underwriters.
There are a few different types of people in the aviation finance business. Some come from an aviation background, whether through their education, pursuit as a professional pilot, work experience in the industry, or simply a passion for aviation. Others may have been educated in finance (probably having worked for a direct lender) and have experience financing aircraft for their clients. Most Brokers that have chosen to specialize in aircraft finance will have a well-rounded knowledge in aviation, finance, and what it takes to secure an aircraft loan or lease.
WHY USE AN AIRCRAFT FINANCE BROKER?
In today’s world, everyone is strapped for time, whether it’s time during business hours or personal time with the family. Instead of contacting ten different lenders to find out all the different loan programs, one phone call to a Broker can be the same as contacting several different direct lenders, thus saving time for the client. In the larger corporate jet market, the CFO is usually given the task of finding the best loan. This can be very time-consuming and they simply don’t have time to shop all the lenders in the business.
This is why a Broker makes sense—they’ll do the work for you so that you can attend to other important business. Also, every lender with whom you speak will want to get a credit package from you. If you send out three to four packages to different lenders, there will be three to four credit bureaus being pulled from each of those lenders, whereas there will be just one with a Broker. This is very important when it comes to credit scores and the amount of time you spend putting these packages together. This time can be significant as most lenders like to see three years of personal tax returns on the guarantors as well as three years of returns on the business. No matter how much revenue a business generates, if the owner has poor credit, it could significantly reduce the possibility of securing an aircraft loan.
Some larger clients don’t feel comfortable sending financials to a Broker for fear that the information could be floated around to several different lenders. After all, not all Brokers shop deals, some will just send a package out to several lenders to see who will approve it the fastest (or even approve it at all). Fortunately, there’s a simple solution for this: before sending out the information, make sure the Broker with whom you decide to work doesn’t operate in this manner. In your initial conversation, the Broker should be able to explain all the different products available so the buyer can decide which loan most interests them.
Once you’ve decided on a Broker, submit a credit application so the Broker can pull credit and get a feel for how good the credit is going to be. (Some Brokers may request a full package so that they can do a full credit analysis prior to sending it to the chosen lender).
A good Broker should be able to discuss all the different finance options available. Every direct lender looks at an aircraft loan differently. Each lender will have a dollar range and types of aircraft that they can lend on. Since a lot of aircraft are used, some lenders will only loan on aircraft that are 10 years old, 20 years old, etc. A good Broker will have all this information at his fingertips and should be able to provide three to five different quotes representative of what’s available on the market. A quality Broker will also know each one of his lenders well enough to know what to look for in a credit package. Sometimes the relationship that a Broker has with a Lender can be crucial in approving a loan.
Another reason you would choose a Broker is because of the relationships they have with aircraft sales companies. If you haven’t already located an aircraft, the Broker will be able to refer you to an organization that can consult you on all the matters that pertain to your specific requirements.
If you don’t have an insurance company that specializes in aircraft, the Broker may be able to help you in that area as well. A good Broker will be heavily involved from the time you first make contact with them until the loan closes and help manage the entire process.
Should you choose to work with your own bank, you’ll often find that they don’t know all that much about aircraft and may not be able to provide you the loan options you’d find through a Broker. Also, your bank is likely to take a lot longer to get through the processing of the loan. Again, time can be an issue, not only because you need the aircraft by a certain date, but because you may lose the aircraft that you really want to another buyer. Brokers don’t make money until the loan is closed, so it’s in their best interest to expedite the process so everything goes smoothly and efficiently. A quality Broker is a marketing expert you can trust to act in your best interest and provide you with the best loan products anywhere in the industry.
HOW DO I FIND A QUALITY BROKER?
The best way to reach a quality Broker is by a referral from someone who has used a particular company or from the aircraft sales company with whom you’re purchasing the aircraft. Most aircraft sales groups have someone they work with on a regular basis who will provide you with a quality product and service.
THE BOTTOM LINE
Aircraft Finance Brokers specialize in an industry whose clients rely on expensive aircraft to transport themselves, clients, and their employees to important business meetings and events around the world. Quality Brokers have a high level of experience, expertise, and professionalism in aviation as well as equipment finance. They’re not on salaries and typically do not get paid until the loan is closed. This means that they’ll work hard to provide you with the best financial package. They’ll have excellent relationships with lending institutions, credit analysts, as well as, insurance agents and title companies. They’re also a great source of information and are able to help negotiate rates and structures of loans to meet your specific requirements. In short, they’re marketing professionals that provide an excellent service for both lenders and aircraft buyers. Best of all, Brokers can save you both time and money!
