Buyin One Anyway
The blog be dammed, I'm buyin one anyway!
Actually, bet I can steal a Platinum Position this week for a big zero premium from one of those weak kneed speculators. Did my homework a couple of weeks ago to see what might be available for financing; thought I would be real clever and start with Cessna to see what kind of deal they would make.
For a Mustang, Textron Turbine Finance had numbers close at hand:
- 10% down
- 20 year loan
- 7 year note
- 6.8% fixed interest
That was clean, easy and reasonable. Since Eclipse has yet to develop a captive financing arm, I called one of the biggest banks in the country that has been financing business jets for over 30 years.
Here are their terms:
For starters, the bank would only recognize the platinum price plus options. They were not interested in funding the premium which I don't expect to be a problem since I am betting I can find a nervous nellie who will be just damn glad to get their initial deposit back this week. For example, I know of an offer made this week on a Platinum Position of $1.3m WITH options!
Now, so long as I agree to no prepayment before a 60 month term, the bank will finance two-thirds of the 60% progress payment, but only based on the Platinum Position price of $950k. So the amount they will front is $342k plus options, if the options are $140k, then the max that they will loan is $482K. The bank made it clear that they are not providing bridge financing. They want the term loan, early cancellation terms are very onerous. So, if I can get a Platinum Position for $1.3m with options, then the bank will finance $428k, this is equivalent to 37% vs 90% from Textron. Now let's say the market is not as scared as I am thinking it is, and sellers are standing by their numbers, I know that I can buy a Platinum Position for $1.6m. This now represents a different scenario with the bank though, as they will still only finance $428k, now we are down to 30% financing.
The bank is not interested in a security interest in the airplane. They want my personal financials to show a $10-15m net worth and my pledge of something valuable and reasonably liquid. I'll have to think of something here.
The interest is 1.75% over libor or prime plus 1%.
A 15 year term and a 5 year note.
The final kicker is that they are only going to take 30 of these sweetheart deals. May be an indication of the banking communities confidence in this program.
Think I'll study these numbers a bit more and maybe call Kenny. Perhaps he knows where I can get a better deal.
(moderators note - numbers are real the narration is fiction)