Question about loans

[popovici]

Question about loans -

the interest + margin is higher in the case of a un-secured loan than in case of a secured loan? and how much from the value of an aircraft is counted as 'security' for that loan?

[brique]

Generally, yes, an unsecured loan will cost more : that reflects the higher risk for the bank if you default : You can see the difference by setting up both kinds of loan for the same amount then getting the bank to quote for them : bear in mind, the bank will also consider your airline size and income in setting its rate. Sometimes, it will not permit an unsecured loan, usually if you already have a loan outstanding or are in a bad financial state.

The full value of the aircraft is used to secure the loan : you can borrow less than its value, but not more : you can only secure a loan on an aircraft that you own, and you can not sell the aircraft until the loan is paid-off : you can still lease it out though.

Thats why it can be useful to have a few fully-owned aircraft around, even if you prefer leasing, just to secure loans on.

[popovici]

Got it. i haven't owned yet any airplane, its easier to ask questions first:)
How about refinancing? for example having 2 unsecured loans and then taking a bigger secured loan, covering them both and leaving yourself whith something to invest? Is there a system in place for that or its just closing the usecured loans (paying the costs) and then taking the secured one?
And how about increasing a loan? or paying a part of the loan? for example i have a 30m loan, secured, and i wana increase that to 60. I must take a different loan?

[exchlbg]

All yes.Loan system is quite simple. You cannot "negotiate" with the bank about it.You may pay back early (for a fee).So for higher loans you either take an additional one or pay back the old and get a completely new.