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Author Topic: Edit new aircraft payments  (Read 520 times)

robertnadr

  • Former member
Edit new aircraft payments
« on: September 15, 2014, 02:23:10 PM »
Does anyone know if you lose or save money by editing your down payments?  I did 20% down to get my spots and to keep cash flow going.  now that I have money I want to put more down so that I don't have a high delivery payment.  However I noticed the numbers don't make sense...

f27  I order 4

$581,260 - 20%
$2,325,020 -on delivery
____________________
$2,906,280 - total cost

My question is does that make the price go down or cost me more.  Reason I ask is if I decided to put 60% it is confusing an here is why:

pay now: $1,233,260
delivery: $1,208,610
So this makes the total my the price quote total when you add it up: $2,441,870

Does this mean I saved $464,410?
Or is my initial 20% payment stay of $581,260 still paid to manuf therefore my total cost of the aircraft increased due to editing?  Because when you add it up it becomes $3,023,130 therefore increasing the purchase by $116,850. ($581,260 - 20%, Edit to 60% $1,233,260, delivery $1,208,610)

So I am trying to figure this out, thx

robertnadr

  • Former member
Re: Edit new aircraft payments
« Reply #1 on: September 15, 2014, 02:24:42 PM »
To help here is the copy of the change order:
   Change order - Price info

Fokker F.27 Mk 200 Friendship (12-Oct-1965) •Price to be paid now: 1 233 260 USD
•New price on delivery: 1 208 610 USD     (-1 116 410 USD)

Total sum to be paid/refunded: 1 233 260 USD

Offline schro

  • Members
  • Posts: 3083
Re: Edit new aircraft payments
« Reply #2 on: September 15, 2014, 02:29:15 PM »
In general, sans a significant discount on the cost of the new plane, changing payment terms will be a bad deal for you. When you "make a payment" early like you're doing, the system reprices the transaction at current market rates that are often far higher than what you paid. There is also a hidden transaction fee for making the change as well. In general, you are better off just keeping the money in the bank and pay the remainder during delivery.

In your case, the total cost would go up as the system presents the incremental cost of the change, so your total price would be the .5m prepaid plus 1.2+1.2m and not the 20% discount you suspect.

Offline Sami

  • Administrator
  • Members
  • Posts: 14544
    • AirwaySim - Are you the next Richard Branson?
Re: Edit new aircraft payments
« Reply #3 on: September 15, 2014, 02:49:30 PM »
On order 581 260 USD
On delivery 2 325 020 USD

=> You have already paid 581 260 USD.


Upon editing the order you will see:
Price to be paid now: 1 233 260 USD
New price on delivery: 1 208 610 USD     (-1 116 410 USD)

=> Means that you will need to pay NOW 1 233 260 USD, and the price to be paid upon delivery will be 1 116 410 USD less.

=> Total prepayments with this change would be 1814520 and total price of the a/c would then be 1814520 + 1208610 = 3023130.

So it's a tad more (116 850;  3.02mil - 2.91mil) since like schro said the change of order afterwards is always more costly than doing it "right" the first time.

robertnadr

  • Former member
Re: Edit new aircraft payments
« Reply #4 on: September 15, 2014, 03:08:05 PM »
Hey guys thanks.  that is what I kinda thought but wanted to make sure. 

thank you for the quick reply.

Rob

Offline Aus380

  • Members
  • Posts: 106
Re: Edit new aircraft payments
« Reply #5 on: October 02, 2014, 01:50:56 PM »
Has an accountant in the game done the math on tax implications? ie. if you reduce your profit and therefor tax bill by increasing the down payment of a new aircraft where that money could not be spent anywhere else, is that a better investment than keeping the money in the "bank" and earning interest? I don't have the time, interest or patience to work it out.

Identity89

  • Former member
Re: Edit new aircraft payments
« Reply #6 on: October 03, 2014, 10:36:15 AM »
Buying aircraft 100% is way cheaper then in partial payment. Still, you should consider the lease price that you pay against the missed interest on paying it forward and the amount of time that you "miss"the cash"

amount *( (interest + 1)^amount of years waiting) =value of the amount

5% = 0.05

Example
1.000.000 amount, 5% interest and 10 year of waiting on the aircraft.

1.000.000 * ((0.05+1)^10 = 1.628.894

because of the waiting you actually pay 1.628.894 for every million paid in advance.

changing the amount in a later stage will be even more costly. calculate it good before you do

Online dmoose42

  • Members
  • Posts: 1264
Re: Edit new aircraft payments
« Reply #7 on: October 03, 2014, 01:34:32 PM »
Also, you should note that the deposit that you place on aircraft is not an expense and therefore there is no tax benefit associated with DP orders.  (The purchase price is depreciated over 25 years as an expense once the aircraft is delivered.

 

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