Aircraft Finance - How It Works

Almost all UK aircraft finance uses one of three structures:

• Hire purchase: you pay a deposit, then fixed monthly payments over the agreed term. At the end, the aircraft is yours. Capital allowances are claimable for business use. The lender holds legal title during the term but you have beneficial ownership from day one.
• Finance lease: lower monthly payments than hire purchase because the lender retains a residual value at the end. At the end of the lease, you can extend, sell the aircraft on behalf of the lender (receiving a share of proceeds), or return it. You never own the aircraft outright, but you control its use throughout.
• Operating lease: the simplest structure - you rent the aircraft for a defined period and return it at the end. No residual value risk. Often includes maintenance packages. Less common for private aircraft in the UK than for commercial fleets.

All UK aircraft finance above approximately £30,000 is secured by registration of a mortgage against the aircraft's entry on the UK Civil Aviation Authority Civil Aircraft Register - the G-register.

This is the aviation equivalent of a ship's mortgage - a charge registered at the relevant authority that gives the lender enforceable rights over the aircraft if you default.

The process: specialist aviation solicitors prepare the mortgage documentation and submit it to the CAA. The mortgage appears on the public aircraft register - any future buyer or lender can check whether the aircraft is subject to an existing charge.

For finance on BMAA-permit microlights, LAA-permit homebuilts, and some very low-value aircraft, a CAA mortgage may not be registered - the lender takes security in other ways. Your broker will advise on the specific security structure.

Aircraft finance assessment is different from property or vehicle finance in several important respects:

• Aircraft value and condition: a specialist aviation valuer assesses the aircraft's current market value. This includes consideration of airframe hours, engine hours, avionics specification, maintenance history, and market demand for the specific type.
• Certificate of Airworthiness: all lenders require a current CofA or ARC (Airworthiness Review Certificate for EASA aircraft). An aircraft with an expired or suspended CofA cannot be financed until airworthiness is restored.
• Engine programme: for turboprop and jet aircraft, lenders strongly prefer engine programme enrolment (Rolls-Royce TotalCare, Pratt & Whitney Eagle Service Plan, etc.). Off-programme aircraft attract lower advance rates.
• Your financial profile: income, assets, credit history, and - for business aircraft - company accounts and purpose of use. For HNW buyers, net worth rather than income is often the primary metric.
• Flying qualifications: particularly relevant for more capable aircraft. A buyer financing a Citation jet without a type rating will face questions from lenders that a type-rated pilot will not.

Typical UK aircraft finance deposits:

• Microlights and permit aircraft: 20-30%. The BMAA/LAA permit nature and more variable secondary markets require higher lender cushions.
• Standard GA (Cessna, Piper, Beechcraft GA): 10-20%. Well-understood aircraft with transparent secondary markets.
• High-performance GA (Cirrus SR22, Bonanza G36): 10-20% for well-maintained examples. Strong residual values support the lower end.
• Turboprops (King Air, PC-12, TBM): 20-30%. Higher values, engine programme requirements, and specialist maintenance costs all drive higher deposits.
• Light jets (Citation CJ, Phenom 300): 25-35%. Jet operating costs, engine programmes, and the need for type-rated pilots all increase the lender's risk assessment.
• Large-cabin jets (Gulfstream, Global): 30-40%. Very high values, complex ownership structures, and bespoke lender relationships at these levels.

A realistic timeline for UK aircraft finance:

• Day 1-2: Initial enquiry and pre-qualification. We assess the aircraft type, your financial profile, and identify the right lender panel.
• Day 3-7: Conditional offer from the lender. Based on the aircraft details and your profile, the lender issues indicative terms.
• Week 2-3: Pre-purchase inspection (PPI). Required for most aircraft - an inspection by a CAA-approved engineer or manufacturer service centre. The PPI report is reviewed by the lender before the formal offer is issued.
• Week 3-4: Formal finance offer and insurance. Once the PPI is clean, the lender issues a formal offer. You arrange specialist aviation insurance (hull and liability) with the lender noted as loss payee.
• Week 4-6: Legal documentation and CAA mortgage. Specialist aviation solicitors prepare the documentation. The CAA mortgage is registered. Settlement to the seller.

For straightforward GA aircraft, this process can sometimes compress to 3-4 weeks. Business jets and international transactions typically take 6-12 weeks.