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If you’re in the market for an airplane, you might be thinking about how you’re going to pay for it. Learn how to pay for an airplane in this complete guide.
Whether you’re a seasoned pilot or you’re just getting started, we all eventually get the itch to buy our own airplanes. Having the freedom to hop in your own plane and fly any time you want is something that you really just can’t put a price on. But if you’ve never bought a plane before, it might seem like an intimidating process. So how do you pay for an airplane?
If you have the extra money on hand to spare, the easiest way to pay for an airplane is with cash and just cover the purchase price in full. But if you don’t want to pay cash for an airplane, you can finance it (take out a loan) similarly to how you can finance a car or even a house.
If you're in the market for an airplane, you probably have a lot of questions about how to go about buying one. How much do they cost? How do you pay for them? Are there any taxes involved? And what are the additional costs that come with purchasing an airplane? In this article, we will answer all of those questions and more. So get ready to buy your very own airplane!
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How Much do Airplanes Cost?
Anyone who's in the market for an airplane is undoubtedly curious about how much they should expect to spend. The thing is, the cost of airplanes is even more variable than the cost of a car, though it does depend on many of the same things. The price will vary depending on the type of plane, its condition, what year it is, how many hours it's been flown, and more.
I'm going to assume that you're not looking to buy a commercial plane, as the price for one of those can easily be hundreds of millions of dollars. And since you and I just can't go buy something like a fighter jet or other military aircraft, I'm pretty sure you're looking for a plane of your own that you can fly around for fun, business, or both.
In that case, you can expect to pay anywhere from $15,000 to millions of dollars depending on what you're in the market for. For most private pilots that buy a used plane of their own in decent condition, the purchase price is typically around $20,000 to $60,000 or so. If you want to know about the cheapest planes to buy and fly, check out our full article on the topic.
Now that you know roughly what you can expect to pay for an airplane, how exactly do you pay for it?
How do You Pay for an Airplane?
As mentioned above, there are two main ways that you can buy an airplane: paying cash for the full purchase price or taking out a loan and financing it. Let's take a quick look at both of these methods so that you know what to expect.
Paying Cash for an Airplane
If you have the full purchase price of an airplane sitting around in cash, then this is probably the easiest way to buy a plane. You simply hand over the money to the seller and walk away with your new aircraft. Of course, it's not quite that simple as there are still some paperwork and other details involved, but you get the idea.
One of the main benefits of paying cash for an airplane is that you will not have to make monthly loan payments. That means more money in your pocket each month, which is always a good thing. Additionally, you will not have to pay interest on the loan, which can save you a decent amount of money over time.
Financing an Airplane (taking out a loan)
The other option for buying an airplane is to finance it by taking out a loan. This is probably the most common way that people buy planes, as not many of us have tens of thousands of dollars just sitting around in cash. When you finance an airplane purchase, the lender will give you the money upfront and you will then make monthly payments to them until the loan is paid off, plus interest.
The interest rate on an airplane loan is typically lower than that of a car loan, but it will still be higher than a mortgage or other type of long-term loan. The length of the loan will also be shorter than something like a mortgage, as most airplane loans are for around 15-20 years. This makes sense that airplane loans fall between car and mortgage loans since that's also typically the price range that airplanes fall in.
Keep in mind that you will also have to pay for insurance and other associated costs when financing an airplane. These costs can add up, so be sure to factor them into your budget before taking out a loan. We'll take a look at some of these extra costs later on in this article.
Are There Taxes When You Buy an Airplane?
One last thing to consider when buying an airplane is the sales tax. The good news is that there is no federal sales tax on aircraft in the United States. However, some (unfortunately, most) states do have their own sales taxes that apply to airplane purchases, so be sure to check with your state's Department of Revenue before buying a plane.
There may also be other taxes and fees that apply when you buy an airplane, so again, be sure to check with your state's Department of Revenue or a tax professional before making your purchase. It's also important to keep the taxes in mind even if you're financing the plane, because your loan might not cover the taxes and you'll have to have enough cash on hand to cover them!
Extra Costs to Consider When Buying an Airplane
Now that we've gone over the basics of how to buy an airplane, let's take a look at some of the other costs that you need to be aware of. These are all costs that go above and beyond the purchase price of the plane itself, so it's important to factor them into your budget before making your purchase. We have a few other articles looking in-depth at the fixed and variable costs of airplane ownership so I'll just touch on a few main ones here.
The first cost to consider is insurance. Just like with a car, you will need to insure your airplane. Aviation insurance can be pretty expensive, so this is definitely something that you need to factor into your budget.
Another cost to consider is hangar rental or tie-down fees. If you don't have a place to keep your airplane, then you will need to either rent a hangar or pay for tie-down fees. This can add up, so be sure to factor it into your budget.
Once you start flying, you will also need to pay for fuel and other associated maintenance costs like repairs, cleaning, and more. Flying your own airplane is not cheap, so you need to make sure that you have enough money in your budget to cover these costs.
There are also some one-time costs that you need to be aware of, such as the cost of getting your pilot's license and the cost of buying or renting aviation tools and equipment. These are all necessary costs if you want to be a pilot, so make sure that you factor them into your budget before making your purchase.
As you can see, there are a lot of costs to consider when buying an airplane. Be sure to do your research and factor all of these costs into your budget before making your purchase. With a little planning and preparation, you can be the proud owner of your very own airplane!
Airplanes are a big purchase, but with a little planning, you can make it happen. Just be sure to factor in all of the costs we've discussed in this article and you'll be on your way to owning your very own plane in no time!