Finances with Wolves

I'll be looking for a Piper Cherokee Six.

This post will contain a gratuitous amount of Piper Cherokee Sixes

Over the past two days I've been calling various places about aircraft loans. Certainly fun if you're into pain.


The local banks with which I've had accounts for 15 years don't want to deal with aircraft. They even recommended an RV if I wanted to travel... that was a laugh that turned into a cry.  Anyways, the bank option was right out.

I gave a call to AirFleet Capital (I'm sure everyone reading this blog has seen their ads or know their name). The person I spoke to was kind enough, but they informed me they don't do loans for aircraft worth less than $100,000 and require 25% down.  They also limit their loans to aircraft newer than 1975 for singles and 1990 for twins.  That rules them out for me, but again they were pleasant enough on the phone; I wouldn't avoid them if I fell into that category in the future.

I called the AOPA Financial Services number just to see what they had to say. I was pleasantly surprised.

I let the rep on the line know I was interested in getting some basic details on what I could easily get approved for in terms of  being able to close the deal on the bird I want.  To keep with the goal of helping others get an idea of where things sit here's the raw numbers:

For a 1970s single they'll want at least 15% down, but for a twin 30% is more likely.  Once the Apache is sold I'll have about $12,000 to put up for down payment.

As 30% down that would net me a $40,000 twin comanche. At that price it would most likely be one which needs a bit of work -- something I'm trying to avoid this time around!

However for the single I'd limit my top end and assume 20% to get a better interest rate.

We'll assume for the sake of this article my credit score is 720. That's not too far from fact, and definitely close enough to get these numbers to match for anyone else who's interested. I also said I wanted to do a longer term loan at 10 or 15 years, the goal is to be able to fly far more regularly. I have the funds on hand should an emergency career-limiting-event ever occur, but this let's me keep more to the skies while still traveling with the family.

In terms of financial stability, I have 15 years of experience in my field and have worked at my current company for 4 years; hopefully I'll be around quite a bit longer, though stuff happens. I've had a mortgage for a few years now and everything has been just fine there.  I figure I represent your typical 30-something who is looking to buy an airplane.

So here, at $12,000 down on a loan with my approximate credit score for a 15 year term I would be approved pretty quickly for a 5% or 6% loan. Assuming $12,000 was 20% down, that would give me a monthly payment of about $375.

The Saratoga is the Cherokee Six's Retractable equivalent

I spoke with a "Kevin" on the phone; on the off chance you read this blog thanks for the info Kevin, it was great getting the details from you. =)

So, with all of the above, it was said it usually takes three days once they receive your paperwork to get an approval decision. After that, closing takes an additional three days and consists of: title search/checking for liens, aircraft history, and then the actual purchase/exchange paperwork.

And to stick with the purpose of this blog, let's break down the real cost of all of this:

My 20% down payment is going to be $12,000.

The first year of insurance on a Cherokee Six for me as a VFR pilot with about 200 hours total including 100hours multi was quoted at just under $1,500.

Cost of gas to ferry a plane back here will most likely cost $500.  Most of the Cherokee Sixes are about 6 hours away. So that's 6hrs x 14gph x $6.00/gal.

Annual and IFR inspections: Flat rate inspection for Annual is $2,000 and $300 for IFR.  Many aircraft are sold with a "fresh annual."  It has been recommended to me by many many many people to never fly through that first annual sold with the plane. They can be pencil-whipped by the seller's mechanic, and it would be in his best interest for you to fly for a year and not find things he may have overlooked.  A thorough annual by your own mechanic before the ink is dry can save a ton of money within the first year.

A general pre-buy will cost around $1,000. Always pre-buy. It's better to lose $1,000 than to be stuck with $50,000 of plane you can't fly.

I also live in the wonderful state of Illinois, where taxes are high and our last two governors are convicted felons. This means I will be paying roughly 10% on the purchase price or fair-value of the aircraft, whichever is higher. That adds another $6,000 to the price tag I'll have to cough up.

So on the day of the buy I will spend:

• $12,000 down payment
• $1,500 insurance
• $500 gas to ferry
• $2,300 for annual plus IFR check
• $1,000 pre-purchase inspection
• $6,000 Illinois Sales Tax (I might hangar her in Wisconsin because of this, however)
• $550 closing-fees by AOPA

Up-front cost of new plane: $23,850

Ways to reduce this cost: 

Buy local, which could roll the pre-purchase into a full annual and eliminate the ferry cost. 

Buy distant enough that it's across the state border (state luxury tax).

Finish my Instrument Rating (drops insurance to $900/yr)

That would drop the purchase-day price to: $15,750

This could be reduced even further by doing 15% down payment, but that would raise the monthly beyond where I'd like.

So there you have it. Buying a decent, affordable plane with $12,000 down will truly cost me about $24,000 to solidify ownership -- double the daydream cost! But, every time I've taken my family on a trip; every single time I've done the Chicago Skyline tour (at least 20 times by now); every single time we decide to fly just to get out of the house it has been worth it. The truth is you should never spell out the cost of ownership to try and justify it. The justification comes with the freedom you have by owning. Detailing the cost should be used to determine whether you're shopping in your price range.

The alternate options:

Some people asked why I didn't consider a Cessna 210 or a Beechcraft Bonanza. 

The Cessna 210 is an excellent alternative for someone looking for a Cherokee Six equivalent. My only reason against it is simply that I prefer low-wing aesthetically.  All arguments about high versus low wing aside, if you don't like the look of what you fly: why did you spend a large chunk of money on it?

The Beechcraft Bonanza meets the criteria as well, it has a much higher entry cost. Given my cost analysis above, I don't want to think of what it would cost me for an aircraft that starts at double the purchase price of a Cherokee Six.  It is along the same lines as to why we didn't go for an Aztec or Navajo: we'd be able to afford to own the plane, but probably not afford to fly it as well. That's something I think everyone should consider when buying a plane: if it's at the top of your purchase range, will you still have money for fuel?

Next Post will likely cover what I'm looking for when I reach out to sellers about their planes, as well as any funny-stories that occur in that time. I already have one...  To the sellers out there don't be surprised if I come asking for details on your Cherokee Six.

Have a Great Day All!

Steven