Smarter Loans Inc. is not a lender. Smarter.loans is an independent comparison website that provides information on lending and financial companies in Canada. We work hard to give you the information you need to make smarter decisions about a financial company or product that you might be considering. We may receive compensation from companies that we work with for placement of their products or services on our site. While compensation arrangements may affect the order, position or placement of products & companies listed on our website, it does not influence our evaluation of those products. Please do not interpret the order in which products appear on Smarter Loans as an endorsement or recommendation from us. Our website does not feature every loan provider or financial product available in Canada. We try our best to bring you up-to-date, educational information to help you decide the best solution for your individual situation. The information and tools that we provide are free to you and should merely be used as guidance. You should always review the terms, fees, and conditions for any loan or financial product that you are considering.
It’s no surprise that airplanes are expensive to buy (and to run), but whether you’re seeking aircraft for a commercial endeavour or for private enjoyment, there are plenty of financing options to help you on your way. Dedicated companies offering aviation financing exist in Canada for just this purpose, and here we have compiled a list of the best for you to peruse.
Take a look at our online directory, below, to compare providers, their terms, rates, offers and customer reviews. If you see a lender you like, you can submit an online loan application right away by clicking the “Apply Now” button next to their name. Alternatively, you can pre-apply with Smarter Loans, and we’ll look through the aviation financing offers in our network to find the one that best fits your needs.
We can help connect you with the top aviation financing providers in Canada.
An aviation loan is exactly what it sounds like – a loan with the express purpose of buying an aircraft (of any kind). These loans are almost always secured against the aircraft being purchased. Lenders come in two varieties: specialists who only offer aviation loans, and general lenders who offer loans of many kinds. The rates and loan terms you qualify for will vary by lender, so it’s good to compare offerings from both types to find the most cost-effective option for you.
Although it may seem self-explanatory that an aviation loan is used to buy an aircraft, this is not as restrictive as you may think. Firstly, there are the different kinds of aircraft that you may be interested in:
The size, passenger capacity, number and type of engines, and intended use all factor into deciding which aircraft is right for your needs. Then, as well as the aircraft itself, aviation loans can be used for associated costs, such as:
Aircraft vary in price quite a bit.
So there’s really no such thing as an “average” price of an aircraft, and the loan amount all depends on what you’re in the market for.
Many aviation lenders do not focus on very small aircraft purchases, and so tend to have a minimum borrowing amount of $50,000. Less can sometimes be borrowed through these lenders, but usually at a higher rate or on a shorter loan term.
Non-specialized lenders have lower limits. For someone looking to finance their private aircraft through a personal loan, it’s important to know that most personal loans cap out at $35,000, although up to $100,000 is possible in exceptional circumstances.
Lastly, corporate loans for the purchase or aircraft are possible; these are much bigger loans, starting with a minimum borrowing amount of $750,000, and are only available to large businesses.
Typically, a downpayment of 15% to 20% of the aircraft’s value is required for an aviation loan. If you have excellent credit, you may be able to get this level down to 10% with some providers. The bigger the downpayment you have, the better terms you can get. If using a personal loan to purchase your aircraft, the size of the downpayment will be based on your personal circumstances and the lender you go with.
The lifetime of an aviation loan can be as short as 5 years, or as long as 20, depending on your circumstances and loan amount. Personal loans used to purchase a private aircraft have shorter terms, often maxing out at 7 years.
The interest rate you qualify for is heavily dependent on your financial circumstances and the loan term. Most aviation loan providers require a minimum credit score of 700 to consider a private buyer’s application; if you pass this threshold, you can expect interest rates in the range of 5% to 8%. Rates will be higher for shorter term loans, lower credit scores, or smaller downpayments.
Most aviation loans have a monthly payment schedule, which consists of the principal plus interest on the loan. It’s important to know this monthly amount in advance, as for private buyers, many aviation loan providers will not only require a minimum downpayment at time of purchase, but will also need to see proof that you have at least 18 months of loan payments available in liquid assets.
Details regarding the aircraft and the borrower will affect loan eligibility and cost.
In terms of the aircraft, the lender will want to know:
In terms of the borrower, the following is important:
Aviation specialists recommend that if you’re not spending at least 240 hours a year in your plane, then the purchase price plus operating costs are probably not worth it. If you’re unsure whether to commit to an outright purchase, you can lease a private or commercial aircraft instead. All aircraft leases are regulated in Canada to ensure consumer protection, and leasing will save you money both initially and on maintenance costs. However you will not own the aircraft.
Aircraft depreciate faster than almost any other type of vehicle, so it’s worth considering purchasing a used one to save yourself some money – up to 90% in some cases. However, used aircraft won’t come with a warranty, and will have higher maintenance costs.
When buying a used aircraft, a pre-purchase inspection is crucial. This inspection can identify any underlying issues, and then this information can be used when negotiating price. If the issue is major enough, it may even cause you to walk away from the purchase. Aircraft repairs are expensive, so an inspection is key to avoiding unnecessary and unforeseen financial problems down the road.
Running an aircraft comes with many responsibilities, and these must be calculated ahead of time to ensure you can afford your aircraft. Ongoing expenses include:
Lastly, it’s important to understand that regardless of the type of aircraft you buy and its intended use, there are regulations you must follow. These regulations are known as the Canadian Aviation Regulations (CAR) and they cover all civil aviation in the country. Full details of these regulations can be found here. What rules apply to you will depend on your province and your aircraft type and its use, and relate to everything from licensing requirements to operational parameters.
Aviation loans typically start at $50,000 and can extend to $750,000 and beyond. The amount you can borrow depends on your company’s financial circumstances, needs, aircraft being bought, downpayment size, and other related factors. If using a personal loan to purchase a private aircraft, the typical limit is $35,000.
Aircraft of any kind can be bought with an aviation loan, though it is worth noting that the older or more bespoke the aircraft, the harder it will be to get loan approval. Loans are typically secured against the aircraft in question, so resale potential is an important consideration for the lender.
Aviation loans can be used for any expense related to your aircraft, including equipment, costs associated with purchase, and repair costs.
Yes, it is possible for businesses to secure a loan to finance a fleet of aircraft. The amount you can borrow and the number of aircraft you can buy will depend on your company’s financial circumstances and expected revenue.
Aviation loans vary widely depending on the borrower and the aircraft being purchased. Generally, loan terms extend from 5 to 20 years. Typical APRs are in the 5% to 8% range. Downpayments need to be 15% to 20% of the aircraft’s value. Most borrowers need to have a minimum credit score of 700.
A good credit score is a common eligibility requirement for an aviation loan, with many lenders requiring a score of at least 700. However, this prerequisite can be circumvented by extenuating circumstances, such as a larger than average downpayment, or by pursuing financing through a personal loan where the terms are less stringent.
The cost of owning a plane consists of initial expenses, such as the purchase price of the plane and associated fees, and ongoing expenses, such as maintenance, fuel, hangar costs, insurance, and so on. The scale of both of these sets of costs depend entirely on the type of aircraft and how much it is used.
An aviation loan from a dedicated lender usually has an interest rate of 5% to 8%; each lender may also have fees, such as an origination fee, an application fee, a valuation fee, or early payment fees. The exact cost of your loan will depend on these factors, as well as the term of the loan.
Amy Orr is a professional writer and editor with over 10 years of experience in the Canadian, U.S. and U.K. financial markets. She has written for numerous publications on topics as diverse as economic literacy, corporate finance, and technical analysis of numerical data. Prior to transitioning to full-time writing, she worked in the hedge fund sector. Her academic background is astrophysics, and she has a Masters in Finance from the University of Edinburgh Business School.
Jenna West is Smarter Loans' in-house financial writer and content director. She has been covering the Canadian FinTech and finance industry since 2017, including financial trends analysis, industry surveys, regulatory updates and changes in Canadian consumer behaviour when it comes to finance.
