Best Time to Finance Prior to Retirement – Aviation Finance

If the goal is to present the best possible scenario of yourself to a lender, then the answer is always “before.” Because most aircraft loans are based on cash flow (vs. “income”), the lender needs to see cash flow sufficient to pay all debts plus the debt of the aircraft while still leaving about another 60% left over to cover your cost of living.

Consistency is key to aircraft lenders and generally they are looking to see that cash-flow is consistent year over year.  When moving from full-time employment to retirement, income flow will usually be different.  Whether that be pension payments, taking retirement distributions from IRA/401K, Social Security, etc. – lenders need to be able to determine that cash flow will be sufficient to support all of your bills plus an aircraft loan and maintenance expenses.  Some lenders may be willing to ‘project retirement income’ via statements for 401K and IRA accounts, others may require up to 2 years 1099 and personal tax returns to gauge what this looks like.

Generally speaking, it is best to seek aircraft financing while you are still employed full-time and look to close on the aircraft purchase prior to your official date of retirement.  This will make the process easier as the underwriting will be based on the prior 2 years and current income vs. the need to project retirement income or need to wait for 2 full years of tax returns after retirement.

This is not to imply retired folks can’t get financing. The…