Credit Limit

[JumboShrimp]

I was just wondering if this is normal, or a bug.

I have aircraft valued at more than 2x of my outstanding loans, good credit rating, but bank is not willing to lend me any more money (only $24 million).

I would think that the banks would be willing to lend a lot more than that...


[attachment expired]

[Curse]

There is a loan maximum in AWS.

[JumboShrimp]

There is a loan maximum in AWS.

Hmm...  Is that limit somewhere around $550 million?

IMO, it makes no sense to have a limit on bank loans and no limit on leases.  Lease is a form of a loan anyway...

[swiftus27]

I guess no bank wants to let you leverage 100%

[JumboShrimp]

I guess no bank wants to let you leverage 100%

I don't think it is a question of leverage at all.  The banks were willing to lend me money when my assets were were around zero or below zero, which would be an infinite leverage.  They were willing to lend me quite a lot even without collateral when I had no loans.

There must be a hard limit, like Curse said.  Can anyone with a large airline with a lot of assets check their loan screen to see if they can borrow over 550 million?  The figure applies to ATB, and may be inflation adjusted...

[NorgeFly]

Mine appears to be capped at around $550million too, despite a company value of over $1.5billion.

[JumboShrimp]

Mine appears to be capped at around $550million too, despite a company value of over $1.5billion.

Thanks for confirming it.

[Jona L.]

I don't have a loan, but my limit is (with 3bn $ value, and AAA rating, as well as 90CI) something with 416M$ (fully backed up)

[JumboShrimp]

I don't have a loan, but my limit is (with 3bn $ value, and AAA rating, as well as 90CI) something with 416M$ (fully backed up)

Which game is this?  The limit may be inflation adjusted, so it may depend on year you are in.

BTW, I think the hard limit on loans should be removed.  How is it that a player can have 10 billion worth of aircraft on lease (the amount is unlimited) but bank would only lend $416 million to a player that can put up 3bn collateral?

[Jona L.]

I am in MT#2, which is 1996 [end Nov.] with that Loan rating. I guess that is a bit less, if inflation adjusted... (if Sami does not use the 1920ies/30ies inflation of GER [1.000.000%] ) I hope he uses some realistic thing for GER that was 2009/2010 1.3%

Jona L.

[d2031k]

I think it's just another measure to stop airlines growing too quickly. 

If it was too realistic and banks were happy to lend more, then airlines could grow much faster - which as we have seen in the past, makes games dull and uncompetitive later on.  The profit margins are so large for the biggest earners that they could easily afford the payments on much larger loans and so any measure that slows expansion even a little is often employed.

[JumboShrimp]

I think it's just another measure to stop airlines growing too quickly. 

If it was too realistic and banks were happy to lend more, then airlines could grow much faster - which as we have seen in the past, makes games dull and uncompetitive later on.  The profit margins are so large for the biggest earners that they could easily afford the payments on much larger loans and so any measure that slows expansion even a little is often employed.

If there is a case to slow down rapid growth of airlines, I think the more appropriate area to look at would be leases.  They are completely unconstrained by anything.  Having cash for 4 months entitles you to get yet another plane.

The restrictions that are already in place for loans (until you hit the cap) are a lot more stringent than leases.

[GDK]

Actually, do you guys need that huge amount of loan?
I mean, you got your airlines running very well, making a lot of profit and you own a fleet of nice plane plus some cash in account. That $500m loan seems nothing compared to what you have in your assets.

[JumboShrimp]

Actually, do you guys need that huge amount of loan?
I mean, you got your airlines running very well, making a lot of profit and you own a fleet of nice plane plus some cash in account. That $500m loan seems nothing compared to what you have in your assets.

In ATB, I joined 6 years into the game, so I have a lot of time to make up...  Of the 4.5 years I am in the game, I spent 2.5 years fighting much larger competitors in my base.  So it has been only about 2 game years since I concentrated on profitability and purchases of planes.  Higher credit limit would allow me to order more aircraft as Direct Purchase rather than lease.  With my current profits, I can order only a percentage of as direct purchase...

[GDK]

1 thing people usually do, order planes as lease to get yourself a slot in the queue and then edit it to purchase once you got the cash. But you will lost the discount.

[JumboShrimp]

1 thing people usually do, order planes as lease to get yourself a slot in the queue and then edit it to purchase once you got the cash. But you will lost the discount.

You learn something new every day.  I did not know you could do that.  I am assuming that at the time of the change, you have to pay the difference, correct?

[GDK]

Yea. Of course you got to pay for it when changed to direct purchase. I'm not sure if it is cheaper or slightly more expensive than directly ordering instead of changing order, but it worth it. Delivery period is very important and no interest for any loan needed.

It is just the same procedure as ordering new planes just that the advantage of this is you can get yourself in the queue before you gain enough money for the direct purchase. Another advantage will be you don't need to get a loan just for ordering. Keep it for emergency financial crisis is better.

[JumboShrimp]

Yea. Of course you got to pay for it when changed to direct purchase. I'm not sure if it is cheaper or slightly more expensive than directly ordering instead of changing order, but it worth it. Delivery period is very important and no interest for any loan needed.

It is just the same procedure as ordering new planes just that the advantage of this is you can get yourself in the queue before you gain enough money for the direct purchase. Another advantage will be you don't need to get a loan just for ordering. Keep it for emergency financial crisis is better.

There were some posts about losing discounts.  Do you know if you are only losing discount on the aircraft you are changing (from lease to purchase) or the entire order?

[GDK]

I'm not sure with that but I think is losing the entire discount.
Try to search for that topic or pm curse for that post.