Podcast: The Truth About the Market
Host: Jason Zilberbrand, President of VREF

Who’s Really Lending on Aircraft in 2026—and Why Some Jets Are Worth More in Pieces

A Gulfstream G450.

Once a $25 million business jet.

Maintained to the demanding standards of one of the world’s largest fractional aircraft operators.

A proven aircraft with a long history of transporting passengers around the world.

And now?

A bank is financing its acquisition by a company that buys airplanes for parts.

Not a charter operator.

Not a corporate flight department.

A parts business.

And it wasn’t the only one.

In the aircraft financing records we’ve been examining, we found additional G450s, Challenger 300s, and a Falcon 900 acquired by parts businesses—with financial institutions providing secured financing.

Think about what that means.

A lender was willing to extend credit against an airplane acquired for its potential value as components, rather than solely for its continued usefulness as a flying aircraft.

That doesn’t prove every airplane in those fleets is worth more disassembled than flying.

But it raises an important question about where lenders believe recoverable value can be found.

What happens when an aircraft becomes more attractive as collateral for its parts than for its future as an operating airplane?

And what does that tell us about the larger aircraft market?

Because while everyone else is watching asking prices, interest-rate announcements, and aircraft delivery numbers, we’re watching something else.

The money.

Who’s lending?

Which aircraft will banks finance?

How much equity do buyers need?

Which lenders are comfortable with older aircraft?

And where are financial institutions beginning to draw the line between airplanes that have a strong ownership market and airplanes whose most predictable value may be in their components?

In Episode 66 of The Truth About the Aviation Market, we’re following the evidence through hundreds of aircraft financing records.

We’re examining interest rates, lending standards, bank behavior, dealer inventory financing, aircraft lease obligations, and the financial pressures developing beneath the surface of the market.

And one theme connects every part of the investigation.

The airplane doesn’t have to change for the economics of owning it to change dramatically.

Sometimes the only thing that changes is the money.

In this episode

• The jets financed for dismantling: Why are banks lending against aircraft acquired by parts companies—and what can that reveal about the financial floor beneath aging business jets?
• The interest rate most buyers aren’t watching: Why the Federal Reserve’s headline rate isn’t necessarily the best guide to what an aircraft loan will cost.
• The $9,000 monthly surprise: How two different financing rates can change payments on the exact same $10 million aircraft loan.
• The appraisal gap that kills deals: Why a buyer can qualify for a loan, agree on a price, and still discover they need hundreds of thousands more in cash at closing.
• The hidden problem with 20-year financing: Why a long amortization schedule doesn’t mean the borrower has 20 years before the debt must be repaid or refinanced.
• The aircraft age trap: How lender age limits can make older jets increasingly difficult to finance—even when they remain capable and airworthy.
• The financing leaderboard: Which lenders actually appear in aircraft lien records, and why some of the most active institutions aren’t the names everyone expects.
• The surprising role of hometown banks: Why regional and community banks account for the majority of new business-aircraft liens in our examined sample.
• The four kinds of aircraft financing: What private banks, aviation specialists, community lenders, and non-bank capital providers do differently.
• The fifth player who doesn’t lend a dollar: When an aircraft finance broker can help—and why understanding how they’re compensated matters.
• The dealer financing pressure point: How rising floor-plan costs can turn unsold inventory into discounted transactions.
• The lease expiration question: What happens when the residual value written into a lease years ago no longer agrees with today’s aircraft market?
• The split between large-cabin jets and turboprops: Why lending activity, lien releases, and changing inventory may tell different stories in different aircraft segments.

1. The Price of Money: Why Aircraft Financing Got More Expensive

Aircraft values are only one side of an aircraft transaction.

The other is the price of the money used to buy the asset.

And in 2026, that equation changed.

On September 16, the Federal Reserve increased its target federal funds rate by 25 basis points, bringing the target range to 3.75%–4.00%.

On October 28, the Fed held rates steady.

But the decision was not unanimous.

Two policymakers preferred another quarter-point increase.

For aircraft buyers, that matters.

Not because every aircraft loan moves automatically with the federal funds rate.

Because the entire financing environment responds to changes in borrowing costs and expectations.

Three rates every aircraft buyer should understand

The Federal Funds Rate

The Federal Reserve’s benchmark influences short-term borrowing conditions throughout the economy.

It affects banks’ funding costs and the broader interest-rate environment.

But it is not necessarily the rate used directly to price an aircraft loan.

SOFR and Prime

Floating-rate aircraft loans may be priced using benchmarks such as SOFR or Prime, plus a contractual spread.

For example, with Prime at 7%, a hypothetical loan priced at Prime plus one percentage point carries an 8% interest rate.

If the applicable benchmark changes, the borrowing cost may change with it, subject to the contract.

Treasury and Swap Rates

Fixed-rate aircraft financing commonly reflects market interest-rate benchmarks, including Treasury yields or swap rates, along with a lender’s credit spread.

The exact benchmark depends on the loan structure and the lender.

In late October 2026, the 10-year U.S. Treasury yield was approximately 5%, reaching 5.05% on October 28.

That matters when lenders are pricing multi-year fixed-rate aircraft credit.

A lender needs to recover its cost of funds, account for risk, and earn a return.

The buyer doesn’t borrow at the Treasury rate. The buyer borrows at the market benchmark plus whatever premium the transaction requires.

And that premium can vary substantially depending on the borrower, the aircraft, and the structure of the deal.

What a higher rate actually costs

Consider a hypothetical $10 million aircraft loan with a 20-year amortization schedule.

Loan scenario	6.0% interest	7.5% interest
Original principal	$10,000,000	$10,000,000
Amortization	20 years	20 years
Approx. monthly payment	$71,643	$80,559
Additional monthly payment	—	$8,916
Additional payments over 60 months	—	Approx. $535,000

Illustration assumes level monthly payments, with no fees or changes in rates. It compares cash payments over the first five years, not total lifetime interest or the remaining balloon balance.

That’s nearly $9,000 more every month.

More than half a million dollars in additional payments over five years.

And nothing about the airplane changed.

Same engines.

Same airframe.

Same maintenance history.

Same avionics.

But a dramatically different ownership expense.

Who feels the pressure?

The impact is particularly important for three groups.

Owners approaching a refinance: Someone who financed an aircraft at a low rate in 2021 or 2022 may face a much higher rate when the loan matures or resets.

Dealers holding financed inventory: Increased borrowing costs raise the expense of carrying airplanes that haven’t sold.

Sellers negotiating with financed buyers: A buyer’s affordable monthly payment can limit the purchase price they can support.

Cash buyers face a different calculation.

They may avoid financing expense, but committing cash to an aircraft still carries an opportunity cost.

When Treasury securities offer attractive yields, the decision to use cash rather than borrow is not automatic.

The key takeaway: Higher borrowing costs don’t mechanically determine an airplane’s market value. They can reduce buyer purchasing power—and ultimately affect the prices at which transactions clear.

2. The Rules That Decide Whether an Aircraft Gets Financed

Everyone wants to know the interest rate.

But the rate is often the last question that matters.

Before a lender quotes attractive terms, it needs to decide whether the aircraft and the borrower qualify.

And several underwriting requirements can change the economics of a deal long before closing.

Rule #1: The Down Payment

For a strong borrower purchasing a financeable aircraft, loan-to-value ratios around 80%–85% may be available.

That implies an equity contribution of approximately 15%–20%.

But those numbers are not guarantees.

Older aircraft, unusual registrations, charter exposure, limited liquidity, or uncertain resale markets can lead lenders to require additional equity.

On some older jets, a 30% down payment may be appropriate.

The key is understanding that lenders do not necessarily finance the seller’s requested price.

Which brings us to the problem that can unravel an entire transaction.

Rule #2: The Appraisal Gap

Imagine agreeing to purchase a business jet for $8 million.

The buyer expects 85% financing.

That suggests a $1.2 million down payment.

Then the lender’s accepted appraisal comes back at $7 million.

The lender applies its 85% advance against the lower supported value.

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Financing calculation	Amount
Agreed purchase price	$8,000,000
Lender-accepted value	$7,000,000
Maximum loan at 85% of value	$5,950,000
Cash required from buyer	$2,050,000
Originally anticipated down payment	$1,200,000
Additional cash needed	$850,000

Suddenly, the buyer needs $850,000 more than anticipated.

The buyer may still be creditworthy.

The aircraft may still be airworthy.

The seller may still believe the asking price is justified.

But none of that changes the lender’s underwriting requirement.

The deal can fail because the lender won’t support the agreed price.

This is why independent valuation belongs at the beginning of an acquisition—not after the purchase agreement is signed.

And an appraisal isn’t necessarily a negotiating tactic.

It’s part of the lender’s risk-management process.

Rule #3: Amortization Is Not the Same as Loan Term

An aircraft loan may have payments calculated over a 20-year amortization schedule.

But the contractual loan term might be only five or seven years.

At maturity, the borrower may owe a substantial balloon payment.

That amount must be paid, refinanced, or otherwise addressed.

A buyer focusing exclusively on the monthly payment can miss the most important financing obligation.

The question isn’t just what the loan costs today. It’s what happens when the loan comes due.

Rule #4: Aircraft Age Can Restrict Financing

Some lenders apply aircraft-age policies or combine aircraft age with maximum amortization.

For example, a lender might impose a 25-year combined age-and-amortization limit.

A 20-year-old airplane could then qualify for only a five-year amortization schedule under that policy.

Another lender using a 30-year limit might offer ten years.

Other institutions have more flexible underwriting and may use different criteria entirely.

The practical consequence is important.

Shorter amortization generally produces higher monthly principal-and-interest payments.

That can shrink the pool of buyers able or willing to finance an older aircraft.

And a smaller buyer pool can create additional pressure on residual values.

Financing availability is part of an airplane’s marketability.

Rule #5: The Borrower Matters

Different institutions underwrite borrowers differently.

Private banks may place significant weight on liquidity, net worth, cash flow, and the broader client relationship.

They may require personal guarantees, minimum liquidity, or continuing financial covenants.

Asset-based aviation lenders may concentrate more heavily on the aircraft’s collateral characteristics.

But that does not mean borrower quality becomes irrelevant.

Before applying, buyers should be prepared to provide financial statements, tax returns, debt information, ownership structures, and related documentation appropriate to the transaction.

Rule #6: The Aircraft’s Condition and Records Matter

Lenders want collateral that can be documented, maintained, insured, and resold.

That means examining:

• Complete maintenance records and logbooks
• Airworthiness Directive compliance
• Damage and repair history
• Engine time and maintenance exposure
• Total airframe time and utilization
• Equipment and aircraft configuration
• Maintenance program enrollment and associated terms
• Insurability and marketability

An aircraft with excellent records and predictable maintenance exposure may be more attractive to lenders than an otherwise similar aircraft with unresolved uncertainties.

Engine programs can help with that predictability.

But the value of an engine program still depends on the actual agreement, coverage, contribution requirements, and transferability.

Rule #7: How the Airplane Will Be Used

An aircraft operated privately under Part 91 may be underwritten differently from an aircraft intended for commercial charter under Part 135.

Charter use can involve higher utilization and different risk characteristics.

Lenders may adjust advance rates, pricing, or requirements accordingly.

Pilot experience, training, insurance, and operational arrangements can also influence whether financing proceeds.

Rule #8: Loan Structure Can Hide Future Costs

Fixed or floating?

Prepayment restrictions?

Balloon payments?

Interest-rate swaps?

Breakage expenses?

Financial covenants?

A low quoted rate is not necessarily the least expensive structure over the life of the transaction.

Borrowers should understand the costs of refinancing, prepaying, selling, or terminating related agreements.

The most important lesson: Know the aircraft’s defensible value, then understand how the lender intends to finance that value.

3. Who’s Actually Lending? What 500 Aircraft Financing Records Reveal

Instead of relying solely on lender advertising, we examined a sample of 500 aircraft-related financial documents filed from late May through October 2026.

The sample includes liens, mortgages, security agreements, amendments, releases, and lease-related documents.

Across the broader sample, we identified:

• 234 new liens, security agreements, and mortgages
• 18 amendments
• 241 lien releases
• A small number of lease-related documents

After separating airline and freight-financing activity from the business-aircraft sector, the analysis identified 219 new business-aircraft liens involving 118 lenders.

These figures are from VREF’s examined records, not a census of every aircraft loan originated during the period.

The larger filing universe contains additional transactions.

And an important limitation remains:

An aircraft ownership transfer and a financing document are separate records. They do not automatically reveal one complete transaction when viewed independently.

A lien establishes a recorded financial interest.

It does not tell us the loan’s interest rate, principal amount, advance percentage, or all its economic terms.

With that distinction established, the findings are revealing.

The Aircraft Lending Leaderboard

The most active institutions in the examined business-aircraft lien sample included:

Institution	New liens observed
PNC	16
JPMorgan Chase	8
Salem Five	7
1st Source Bank	6

Additional lenders appearing prominently included Prism Bank, Enterprise Bank & Trust, Seacoast National Bank, NFS Capital, and AFC Financial Services.

The most surprising result, however, is not the top lender.

It’s how fragmented the lending market appears.

Of the 118 institutions identified, 76 appeared on just one new lien.

And the ten most active lenders together accounted for less than one-third of the examined business-aircraft liens.

That’s a very different picture from a market dominated by only a handful of national institutions.

Aircraft financing is a much more diverse business than the headline bank names suggest.

Community and Regional Banks Lead the Sample

Our classification of the 219 new business-aircraft liens showed:

Lender category	Observed new liens	Approx. share
Regional and community banks	123	56%
National and large regional banks	60	27%
Non-bank finance companies	29	13%
Credit unions	4	2%

Percentages are rounded; the categories shown do not account for every document in the sample.

This finding challenges an easy assumption about the aircraft finance market.

Some buyers of high-value assets are borrowing from institutions with relatively modest national profiles.

A community bank may finance an airplane because it knows the borrower, understands the business, and values the relationship.

That can be a competitive advantage.

But it also makes defensible collateral values critically important.

A bank that knows the customer but has limited specialized aircraft experience still needs reliable evidence of what the collateral is worth.

4. Different Aircraft Attract Different Lenders

The records show a fairly distinct relationship between aircraft category and lender type.

Large-Cabin Jets: The Major Banks

Among 55 observed new large-cabin jet liens, national and large regional institutions accounted for 27.

These included transactions involving aircraft such as Gulfstream and Bombardier long-range business jets.

The institutions active in this segment include major private banks and wealth-management-oriented lenders.

For these transactions, the aircraft financing relationship may be part of a much larger financial relationship.

The bank may be lending against the aircraft.

But it is also evaluating the client’s liquidity, assets, and overall business.

Light Jets: Regional Banks Take the Lead

Of 57 observed light-jet liens, 38 involved regional banks.

This reflects the importance of aviation-specialist institutions and relationship lenders serving the owner-operated and smaller business-aircraft market.

These lenders may have more familiarity with different generations, older airframes, and aircraft-specific valuation considerations.

Turboprops: Community Banking Is Central

Regional banks appeared on 24 of 35 observed new turboprop liens.

Many turboprop buyers operate within business structures where relationships with local and regional lenders are already established.

The aircraft becomes another financeable operating asset.

Piston Aircraft: Local Relationships Matter

Among 15 observed piston-aircraft liens, 11 involved regional or community banks.

These lenders may know the owner professionally, personally, or through an existing business relationship.

But that does not mean collateral valuation can be an afterthought.

A good lending relationship doesn’t replace a good aircraft valuation.

5. New Aircraft vs. Used Aircraft: Where the Financing Really Happens

Among the 219 new business-aircraft liens in the sample, 39 involved aircraft identified as newly delivered.

That’s approximately 18%.

The remaining majority involved previously owned aircraft.

That distinction matters.

Newer aircraft may offer more predictable manufacturer support, warranty coverage, and resale demand.

Used aircraft introduce a much wider range of collateral considerations.

Age.

Maintenance exposure.

Engine condition.

Damage history.

Parts availability.

Support.

Remaining useful life.

And secondary-market liquidity.

The older and more unusual the aircraft becomes, the more important specialized underwriting may be.

Which is one reason aviation-specialist lenders continue to play such a substantial role.

The Other Side of the Records: Loans Being Paid Off

We also examined recorded lien releases.

There were 241 releases in the broader sample.

Among the loans whose ages could be determined, the median observed time between lien origination and release was approximately 3.7 years.

Nearly one in five was released within a year.

That short period can be consistent with several types of activity, including bridge financing, dealer inventory transactions, refinancing, or rapid resale.

But the release alone does not establish which explanation applies.

Approximately 30% of the observed releases related to loans originated during 2020–2022.

That period is significant because many borrowers obtained financing when interest rates were comparatively low.

Now the loans are aging.

Some borrowers may be selling.

Others may be refinancing or repaying obligations.

And some face a much different rate environment than the one in which they originally borrowed.

6. The Four Kinds of Aircraft Financing—and the Middleman Who Isn’t a Lender

Aircraft financing isn’t one market.

It’s several overlapping markets serving different borrowers and assets.

Understanding the differences can save time, improve negotiating leverage, and help buyers avoid a financing structure that doesn’t fit their airplane.

Type 1: Money-Center and Private Banks

These institutions commonly serve clients with substantial assets and established financial relationships.

Their aircraft lending can be integrated with wealth management, business banking, or corporate treasury services.

They may offer attractive pricing to borrowers who meet their requirements.

But that pricing may come with financial covenants, relationship expectations, and guarantees.

Best fit: Often newer, higher-value aircraft and financially strong borrowers who maintain substantial institutional relationships.

Tradeoff: Favorable pricing may depend on borrower financial strength and the continuation of a broader banking relationship.

Type 2: Aviation-Specialist Banks

These institutions make aircraft financing a substantial part of their business.

They often understand specific aircraft models, maintenance programs, ownership structures, and the complications associated with older airframes.

An aviation specialist may consider transactions that fall outside a general lender’s preferred underwriting profile.

Best fit: Used aircraft, specialized aircraft, more complicated transactions, and buyers who want a lender with aviation-specific expertise.

Tradeoff: Pricing, equity requirements, and loan structure may differ from what a private bank offers its strongest clients.

Type 3: Community Banks and Credit Unions

A relationship lender may approve an aircraft loan based partly on its knowledge of the borrower and their broader financial position.

That can be particularly useful in piston and turboprop transactions.

Best fit: Buyers with strong local banking relationships and comparatively straightforward aircraft acquisitions.

Tradeoff: Some lenders may have limited aircraft-specific underwriting resources, making independent valuation especially important.

Type 4: Non-Bank Capital

This category includes specialized finance companies, aircraft lessors, captive financing businesses, and private-capital providers.

These institutions may offer arrangements such as sale-leasebacks, leasing structures, or transactions involving assets and ownership profiles outside some traditional bank policies.

Best fit: More complex deals, certain older aircraft, cross-border structures, or borrowers seeking alternatives to conventional bank debt.

Tradeoff: Additional flexibility may come with higher financing costs, specialized contractual terms, or different residual-value obligations.

The Fifth Player: The Aircraft Finance Broker

A finance broker does not necessarily supply the loan.

The broker helps identify lenders, present the transaction, and compare available options.

This can be valuable for buyers with unusual aircraft, complex financial profiles, or limited lending relationships.

But borrowers should understand how compensation works.

Is the broker paid by the lender?

Does the borrower pay a separate fee?

Is the compensation reflected in the interest rate?

Are multiple financing options being presented?

A finance broker can provide useful access and expertise. But a good borrower should always understand who is getting paid, by whom, and for what.

7. Dealer Inventory: When the Floor Plan Becomes the Problem

Aircraft dealers don’t simply sell airplanes.

Some acquire them into inventory using borrowed money.

That creates a very different economic exposure from brokering an aircraft owned by someone else.

The dealer pays carrying costs while waiting for a buyer.

And those costs can rise as interest rates increase.

This isn’t an abstract issue for VREF.

Our perspective is informed by firsthand experience carrying 28 aircraft on a reported $150 million floor-plan facility during the 2008 financial crisis.

The danger was not that the airplanes suddenly stopped functioning.

The problem was that financing and market conditions changed faster than the inventory could be sold.

What the 2026 financing records show

Our sample identified approximately 14 new liens associated with dealer or trader inventory.

Financing appeared across aircraft including Gulfstream, Bombardier Global, and Citation models.

The institutions involved included banks and specialized capital providers.

This is evidence that financial institutions remain active in financing aircraft inventory.

It is not evidence that the specific dealers involved are experiencing distress.

But the economics of floor-plan financing deserve attention.

If an aircraft sits longer than expected, carrying costs accumulate.

If the dealer’s rate is floating, the expense can rise further.

Eventually, the seller may decide that reducing the price is financially preferable to continuing to hold the airplane.

That is when financing costs can begin influencing comparable-sale evidence.

Why one forced sale can affect an entire model

An airplane sells below previous expectations.

The sale becomes a data point.

Other buyers notice.

Lenders and appraisers examine the transaction.

Other sellers may face new questions about their asking prices.

Not every discounted sale establishes a new market level, and transaction circumstances matter.

But the interaction between financing pressure and transaction prices is real.

The cost of holding an airplane can eventually influence the price at which somebody is willing to sell it.

8. When Banks Finance Airplanes for Parts

Now we return to the aircraft that opened the episode.

Gulfstream G450s.

Challenger 300s.

A Falcon 900.

Aircraft acquired by businesses engaged in aircraft parts and dismantling activity, with financing recorded against the purchases.

These transactions raise a critical distinction between two different forms of aircraft value.

Value as an operating aircraft

When an airplane is acquired for continued flight operations, buyers evaluate its usefulness as transportation.

Range.

Reliability.

Mission.

Maintenance.

Operating costs.

Support.

And eventual resale.

Value as an inventory of components

A dismantling business may evaluate the same airplane differently.

Engines.

Avionics.

Landing gear.

Flight controls.

Structural components.

Other serviceable parts.

The aircraft becomes a potential source of components that can be sold, subject to their condition, documentation, eligibility, demand, and recovery costs.

A lender willing to finance this kind of acquisition is prepared to underwrite a transaction with a different economic thesis from an ordinary owner-operator loan.

But the recorded lien does not reveal the lender’s complete underwriting analysis, loan-to-value ratio, or ultimate recovery expectations.

And not every acquisition by a parts company necessarily results in immediate dismantling.

What the records establish is that financing exists for these assets in the parts-business channel.

What this means for aging aircraft

A business jet can reach a point where continued operation requires increasingly expensive maintenance, while its components retain demand from the operating fleet.

That can change who is interested in buying the airplane.

Instead of competing exclusively for pilots and operators, the aircraft may attract buyers whose business depends on parts recovery.

That doesn’t mean every example of the model should be valued as scrap.

But it does mean the analyst needs to understand the market participants and the economic reasons they’re buying.

The same model can have one market among operators and another among component-recovery businesses.

And in some cases, those markets may overlap.

That’s a valuation question—not merely a maintenance question.

9. Aircraft Inventory Is Not Moving in One Direction

The financing data becomes even more interesting when compared with aircraft offered for sale.

Across the aircraft makes tracked in the episode, advertised inventory totaled approximately 3,225 aircraft, an increase of just 53 over six months.

At the aggregate level, that’s a relatively modest change.

But the underlying categories tell very different stories.

Aircraft category or make	Six-month inventory movement
Gulfstream	Up approximately 26%
Learjet	Up approximately 32%
Falcon	Up approximately 20%
TBM	Up approximately 28%
Baron	Down approximately 43%
Caravan	Down approximately 13%
Cessna piston aircraft	Down approximately 18%

Gulfstream’s advertised inventory reached approximately 233 aircraft, an increase of 48 over the six-month period.

Meanwhile, some piston and utility turboprop segments experienced declining advertised inventory.

These movements are descriptive observations from VREF’s tracked population.

They do not establish that every model within a manufacturer category is experiencing the same conditions.

But they reinforce a lesson we’ve returned to repeatedly:

There is no single aircraft market.

Demand, supply, aircraft age, financing availability, and buyer expectations vary substantially across segments.

10. Large-Cabin Jets and Turboprops: Two Different Financing Stories

One of the more interesting comparisons in the episode involves recorded new liens and lien releases.

Within the analyzed categories:

Segment	New liens	Lien releases
Large-cabin jets	55	41
Turboprops	35	56

The difference is striking.

In the large-cabin sample, recorded new liens outnumbered releases.

In the turboprop sample, releases substantially outnumbered new liens.

That may indicate different financing behavior in the two categories.

However, counts alone do not establish that the outstanding dollar amount of debt increased or decreased.

The records also do not tell us the size of each loan.

Still, the contrast becomes more revealing when placed beside changing for-sale inventory.

The large-cabin segment shows new financing activity alongside rising advertised Gulfstream inventory.

Several turboprop categories show a different relationship between lien activity and supply.

What matters is not a single statistic.

It’s the collection of indicators.

New debt.

Releases.

Inventory.

Carrying costs.

Lease maturities.

And transaction values.

Different aircraft segments can respond very differently to the same interest-rate environment.

11. The Lease Expiration Problem: What Happens When the Residual Is Wrong?

Aircraft leasing introduces another important valuation risk.

Our review identified 29 aircraft leases with recorded end dates between November 1, 2026, and April 1, 2027.

The aircraft included high-value business jets and turboprops.

The named lessors included major financial institutions and specialized leasing businesses.

A lease expiration does not automatically mean an aircraft will be returned or sold.

The actual outcome depends on the contractual provisions and the decisions of the parties.

But these approaching dates matter because they create potential decision points.

Depending on the agreement, the lessee and lessor may face choices involving:

• Extending or renewing the lease
• Purchasing the aircraft under an available option
• Returning the aircraft
• Remarketing or refinancing the asset

And each alternative depends on the current economics.

The residual-value question

A lease may have been structured years ago using assumptions about the aircraft’s future value.

But aircraft markets change.

An aircraft worth a certain amount when the agreement was signed may not support the same number when the lease expires.

If the aircraft’s current value is below a contractual residual assumption, the economic consequences depend on how the lease allocates residual risk.

In some structures, the lessor bears substantial remarketing exposure.

In others, the lessee may have purchase obligations, guarantees, or other contractual responsibilities.

The point is not that every lease expiration creates a problem.

It’s that the aircraft’s current market value becomes especially important when a long-term financing arrangement reaches a decision point.

And when multiple aircraft reach similar decision points in a segment with increasing inventory, those outcomes deserve attention.

12. What We’re Watching Next

Three pressures deserve particular attention.

Large-Cabin Aircraft Financing

We’re monitoring whether the observed increase in new large-cabin liens continues, how financing conditions evolve, and whether higher borrowing costs influence buyer behavior.

Dealer Inventory Exposure

We’re watching the interaction between financing costs, days on market, and actual transaction prices.

A dealer holding expensive inventory may have very different incentives from an owner with no debt on the aircraft.

Upcoming Lease Maturities

We’re watching what happens as aircraft leases reach their contractual end dates.

Do the aircraft remain in service with the existing operators?

Are purchase options exercised?

Do aircraft return to lessors?

Do additional aircraft become available for sale?

And how do completed transactions compare with historical residual assumptions?

These are not predictions that a particular institution or aircraft owner is distressed.

They are market indicators that help explain how financing conditions can influence aircraft supply and values.

The records tell us where financial activity is occurring. The transactions will tell us how the market responds.

Frequently Asked Questions

1. What determines the interest rate on an aircraft loan?

Aircraft loan pricing depends on the financing structure, market interest-rate benchmarks, the lender’s cost of funds, borrower creditworthiness, aircraft characteristics, loan-to-value ratio, and other contractual requirements.

Floating-rate loans may reference SOFR or Prime.

Fixed-rate loans may be influenced by Treasury or swap rates plus a lender-specific spread.

There is no single aircraft interest rate that applies to every buyer.

2. Why does the 10-year Treasury yield matter to aircraft financing?

Treasury yields influence broader market borrowing costs and can serve as important reference points for fixed-rate financing.

Aircraft lenders also consider their own funding costs, duration, credit risk, and desired return.

The 10-year yield is a useful market signal, but not every aircraft loan is priced directly from the 10-year Treasury.

3. How much does a higher interest rate affect an aircraft loan?

On a hypothetical $10 million loan amortized over 20 years, increasing the interest rate from 6% to 7.5% raises the monthly payment from approximately $71,643 to $80,559.

That’s nearly $9,000 more per month, assuming the same principal and amortization.

Actual payments depend on the loan agreement, term, fees, and other conditions.

4. How much down payment is required to buy a business aircraft?

Some well-qualified borrowers financing eligible aircraft may obtain advances of approximately 80%–85% of supported value.

That implies a 15%–20% equity contribution.

Older aircraft, unusual ownership structures, charter use, or other risk factors can lead to larger down payments.

Requirements vary by lender and transaction.

5. Does a lender finance the aircraft’s asking price or appraised value?

Many lenders calculate the maximum loan using the lower of the agreed purchase price and the value they accept for underwriting.

For example, a lender advancing 85% against an accepted value of $7 million may provide no more than $5.95 million, even when the agreed purchase price is $8 million.

The buyer would then need to supply the difference.

6. What happens if an aircraft appraisal comes in below the purchase price?

The buyer may need to contribute additional equity, renegotiate the purchase price, obtain different financing, or reconsider the transaction.

The options depend on the purchase agreement and lender requirements.

This is why establishing a defensible value before making an offer can reduce financing surprises.

7. What’s the difference between aircraft loan term and amortization?

Amortization is the schedule used to calculate payments and reduce the principal balance.

Loan term is the contractual period before the debt matures.

A loan could have payments calculated over 20 years while requiring repayment or refinancing after five or seven years.

That can create a substantial balloon payment.

8. Why are older jets harder to finance?

Some lenders impose aircraft-age restrictions, shorter amortization periods, lower advance rates, or additional requirements.

Older aircraft may also present greater maintenance exposure, limited manufacturer support, or thinner resale markets.

These factors can reduce financing options and the number of qualified buyers.

However, financing is not universally unavailable for older aircraft, and specialized lenders may offer alternatives.

9. Do banks prefer aircraft enrolled in engine maintenance programs?

Some lenders regard eligible engine program enrollment favorably because it may reduce certain maintenance-cost uncertainties and support resale marketability.

But the benefits depend on coverage, outstanding obligations, transferability, and the specific program terms.

A program’s usefulness to a lender does not automatically establish whether it is financially worthwhile for the owner.

10. Is it more expensive to finance an aircraft used for charter?

It can be.

Commercial charter use may involve higher utilization and different risk characteristics.

Some lenders respond through pricing adjustments, additional equity requirements, or more restrictive terms.

The exact treatment depends on the lender, aircraft, operation, and ownership structure.

11. Which banks are financing aircraft in 2026?

Our examined lien records identified a broad market including major national institutions, regional banks, community lenders, aviation specialists, and non-bank finance companies.

PNC, JPMorgan Chase, Salem Five, and 1st Source were among the most active names in the sample.

But more than half the examined new business-aircraft liens involved regional or community banks.

12. Does the number of aircraft liens tell us how many aircraft were financed?

Not necessarily.

Lien records may document new loans, refinancing, amendments, and other secured financial arrangements.

An aircraft ownership transfer and a lien may be recorded separately.

A lien filing also does not necessarily identify the loan amount or rate.

Therefore, lien counts should not automatically be treated as counts of newly financed aircraft purchases.

13. What is an aircraft finance broker?

An aircraft finance broker is an intermediary who helps borrowers identify and obtain financing from lenders.

Brokers may assist with lender selection, application preparation, structuring, and comparison of available terms.

They are not necessarily the source of the loan funds.

Borrowers should ask how the broker is compensated and whether any fees or commissions affect the overall financing cost.

14. Why would a bank finance an airplane purchased by a parts company?

Aircraft purchased for dismantling or component recovery may have economic value through their engines, avionics, landing gear, and other serviceable components.

A lender may finance that acquisition based on its assessment of the borrower, collateral, and recoverable value.

The recorded lien alone does not establish the lender’s precise valuation method or prove that dismantling is more profitable than continued operation.

15. Does financing a jet for parts mean that aircraft model has become worthless?

No.

A model may retain demand among operators while some older or high-maintenance examples are acquired by parts businesses.

Individual aircraft condition, maintenance exposure, remaining useful life, support availability, and market demand all matter.

However, parts-buyer activity can provide useful context when evaluating the economic alternatives available to owners of aging aircraft.

16. What is aircraft floor-plan financing?

Floor-plan financing allows dealers to acquire and hold aircraft inventory using borrowed money.

The dealer generally incurs financing costs while the aircraft remains in inventory.

If those costs rise or the airplane takes longer to sell, the dealer’s economics can deteriorate.

That may affect pricing decisions, although an aircraft being financed through a floor plan is not itself evidence of distress.

17. What happens when an aircraft lease expires?

Depending on the contract, the aircraft may be returned, purchased, refinanced, or remain under an extended leasing arrangement.

The current aircraft value can be important to determining the financial attractiveness of each option.

Residual-value obligations and the allocation of financial risk depend on the specific agreement.

18. Why is an independent appraisal important before refinancing or buying an aircraft?

A defensible appraisal provides an evidence-based opinion of value for an identified aircraft and valuation purpose.

It can help borrowers understand likely collateral-value concerns, identify potential financing gaps, and support discussions with lenders.

Different lenders may have their own appraisal requirements, so buyers should confirm the accepted valuation standard and qualifications in advance.

19. Can rising interest rates lower aircraft values?

Yes, indirectly.

Higher rates can increase borrowing costs and reduce what financed buyers can afford.

They can also raise inventory carrying costs and affect refinancing decisions.

But interest rates are only one influence on aircraft values.

Aircraft supply, model generation, maintenance exposure, buyer demand, and transaction activity also matter.

The effect is not uniform across aircraft categories.

20. What’s the biggest lesson from Episode 66?

Aircraft values and aircraft financing cannot be understood separately.

Buyers need lenders willing to support the collateral.

Lenders need defensible values.

Dealers need financing they can carry.

Lessors need realistic residual assumptions.

And aircraft owners need to understand what happens when financing terms change.

The airplane may remain exactly the same.

But when the cost and availability of money change, the market around it can change substantially.

The Bottom Line: The Airplane Doesn’t Change. The Money Does.

An aircraft can lose buyer demand without accumulating another flight hour.

It can become harder to finance without suffering mechanical damage.

A dealer can become more motivated to sell without anything changing in the aircraft’s condition.

And a jet that once traded as a desirable transportation asset may eventually attract buyers interested primarily in its components.

Those are financial realities.

Not necessarily indications that anyone has done anything wrong.

The evidence in this episode highlights several important distinctions.

There are many more aircraft lenders than the biggest banking names suggest.

Different types of lenders serve different aircraft and borrowers.

The same interest-rate environment affects market segments differently.

A lender’s accepted collateral value can determine whether a transaction closes.

And when financing conditions change, aircraft values may respond before the listing websites acknowledge what’s happening.

That’s why we pay attention to more than advertised asking prices.

We look at transactions.

We look at market activity.

We look at aircraft-specific risks.

And we examine the financial realities influencing who can buy an airplane, what lenders will support, and how those decisions affect market value.

Because the number that matters isn’t always the number on the listing.

Sometimes it’s the number the credit committee will approve.

Sometimes it’s the number a dealer must accept to move inventory.

Sometimes it’s the residual value at the end of a lease.

And sometimes it’s the value of an airplane in pieces.

The common denominator?

What the market can actually support.

Before the Bank Tells You What Your Aircraft Is Worth, Find Out for Yourself

Thinking about buying, selling, or refinancing an aircraft?

Don’t wait until the purchase agreement is signed or the balloon payment is due to discover that your value and your lender’s value don’t agree.

VREF provides independent aircraft valuation intelligence, historical market data, and professional appraisal services to help buyers, owners, lenders, brokers, and insurers make decisions grounded in actual market evidence.

Whether you’re evaluating a piston single, an older turboprop, a midlife business jet, or a large-cabin aircraft, understanding the current value of the asset is one of the most important steps in understanding your financing options.

Know your aircraft’s value before the financing conversation starts.

SUBSCRIBE TO VREF ONLINE — SEE WHAT YOUR AIRCRAFT IS REALLY WORTH

Join the conversation

We’re interested in hearing from aircraft owners and borrowers about the financing terms they’re seeing.

Who financed your aircraft?

What rate were you offered?

Was it fixed or floating?

How much equity did the lender require?

Did the appraisal affect the transaction?

Did you use a finance broker?

Share your experience in the comments or contact us at info@vref.com.

Actual lending experiences can add useful context to the financial documents we’re tracking, especially because lien filings don’t disclose the full economics of the loan.

Make decisions based on facts, not feelings.

Fly safe. Stay smart.