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Pre-Purchase Inspection Guide

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The Ultimate Guide to Aircraft Pre-Purchase Inspections: What Lenders Really Look For

Published: January 9, 2026 • Last Updated: January 9, 2026 • Reading Time: 18 min

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The aircraft pre-purchase inspection is arguably the most critical step in any used aircraft transaction. For buyers, it's the opportunity to uncover hidden problems before committing hundreds of thousands of dollars. For sellers, it's the moment of truth when their aircraft's true condition is revealed. But there's a third party whose perspective is often overlooked: the lender.

When you're financing an aircraft purchase, the lender has a vested interest in the pre-buy inspection results. After all, the aircraft serves as collateral for your loan. If you default, they need to be confident they can recover their investment by selling the aircraft. This means lenders scrutinize pre-buy reports with a critical eye, looking for specific indicators of value, condition, and marketability.

Understanding what lenders look for in a pre-purchase inspection can mean the difference between a smooth closing and a deal that falls apart at the last minute. In this comprehensive guide, we'll pull back the curtain on the lender's perspective, revealing exactly what they're looking for and how you can position your aircraft purchase for financing success.

Decoding the Lender's Mindset: Why the Pre-Buy is Their #1 Risk Mitigation Tool

To understand what lenders look for in a pre-purchase inspection, you first need to understand how they think about aircraft financing risk. Unlike a home mortgage where the property is stationary and relatively easy to value, aircraft present unique challenges:

The Collateral Challenge

Aircraft are mobile assets that can literally fly away. They depreciate differently than real estate, with values heavily influenced by maintenance status, damage history, and market conditions. A lender's worst nightmare is financing an aircraft at $500,000 only to discover—after a default—that it's actually worth $350,000 due to undisclosed issues.

This is why the pre-purchase inspection serves as the lender's primary risk mitigation tool. It's their opportunity to verify that the aircraft is worth what you're paying for it and that it will maintain sufficient value throughout the loan term to protect their investment.

What Lenders Are Really Evaluating

When a lender reviews a pre-buy inspection report, they're assessing several key factors:

According to Aviation International News, lenders reject approximately 15-20% of aircraft loan applications based on pre-buy inspection findings, making it one of the most common reasons for deal failure.

The Loan-to-Value Equation

Lenders typically finance 80-85% of an aircraft's appraised value. The pre-buy inspection directly influences this calculation. If the inspection reveals issues that reduce the aircraft's value below the purchase price, the lender may:

For a detailed understanding of how aircraft values affect financing, see our guide on understanding LTV and aircraft appraisals.

Lender's Perspective

Lenders view the pre-buy inspection as insurance against making a bad loan. They're not trying to kill your deal—they're trying to ensure the aircraft is worth what you're paying and will hold sufficient value to protect their investment.

The Lender's Hotlist: Critical Inspection Points That Make or Break Your Aircraft Loan

While a thorough pre-buy inspection covers hundreds of items, lenders focus intensely on specific areas that most significantly impact aircraft value and marketability. Here's what they're scrutinizing:

1. Logbook Integrity and Completeness

For lenders, logbooks are sacred documents. They tell the aircraft's complete story and are essential for establishing value. Lenders look for:

An aircraft with incomplete logs can lose 15-30% of its value compared to an identical aircraft with complete records. For lenders, this represents unacceptable collateral risk.

2. Engine Status and History

The engine is typically the most valuable component of a piston aircraft and a major value driver for turbine aircraft. Lenders pay close attention to:

The FAA's engine overhaul guidelines provide the regulatory framework that lenders use to assess engine status.

3. Airframe Condition and Corrosion

Structural integrity is non-negotiable for lenders. Key inspection points include:

Aircraft based in coastal or humid environments receive extra scrutiny, as corrosion can significantly impact long-term value and airworthiness.

4. Avionics and Equipment

Modern avionics significantly impact aircraft value and marketability. Lenders evaluate:

An aircraft with outdated avionics may require $20,000-$100,000 in upgrades to remain competitive in the resale market—a factor lenders must consider when assessing collateral value.

5. Damage History

Perhaps no single factor impacts lender confidence more than damage history. They want to know:

For more on how damage history affects financing, see our article on damage history, underwriting, and insurance.

6. Compliance Status

Lenders verify that the aircraft meets all regulatory requirements:

Pro Tip

Request a preliminary records review before the physical inspection. Many deal-killing issues can be identified in the logbooks, potentially saving thousands in inspection costs if the aircraft isn't financeable.

Deal-Killer Red Flags: 5 Inspection Findings That Will Get Your Loan Application Rejected

While lenders can work around many inspection findings, certain discoveries will almost certainly result in loan denial. Here are the five most common deal-killers:

⚠️ Red Flag #1: Incomplete or Reconstructed Logbooks

Missing logbooks or gaps in maintenance history are among the most serious issues for lenders. Without complete records, it's impossible to verify the aircraft's true condition, maintenance history, or compliance status. Reconstructed logs, while better than nothing, typically result in 20-30% value reduction and may make the aircraft unfinanceable with traditional lenders.

Red Flag #2: Undisclosed Damage History

When a pre-buy inspection reveals damage that wasn't disclosed by the seller, lenders become extremely cautious. This raises questions about:

Even if the damage was properly repaired, the failure to disclose it creates trust issues that can derail financing. Always obtain a complete FAA aircraft history before making an offer.

Red Flag #3: Engine at or Beyond TBO

An engine at or past its recommended Time Between Overhaul presents significant financial risk. Overhaul costs range from $25,000 for simple piston engines to $100,000+ for complex powerplants. Lenders typically:

For turbine aircraft, engines not enrolled in maintenance programs (like TAP, ESP, or MSP) face similar scrutiny.

Red Flag #4: Significant Corrosion

Corrosion is cancer for aircraft. While surface corrosion can often be treated, structural corrosion raises serious concerns:

Aircraft with significant corrosion findings are typically unfinanceable unless the seller agrees to comprehensive repairs before closing.

Red Flag #5: Non-Compliance with Airworthiness Directives

AD non-compliance is a legal and safety issue that lenders take extremely seriously. An aircraft out of AD compliance is technically not airworthy, which means:

Lenders will require all ADs to be complied with before closing, with documentation provided.

How Lenders Handle Red Flags

When inspection findings raise concerns, lenders typically follow this decision tree:

  1. Assess severity: Is this a deal-killer or a negotiating point?
  2. Quantify impact: How much does this reduce aircraft value?
  3. Evaluate remediation: Can the issue be fixed before closing?
  4. Adjust terms: Modify loan amount, require repairs, or increase down payment
  5. Final decision: Proceed with modified terms or decline

Understanding this process helps you anticipate lender concerns and address them proactively.

From Inspection Report to 'Approved': How to Leverage Your Pre-Buy for a Seamless Closing

A well-executed pre-purchase inspection doesn't just protect you—it can actually strengthen your loan application and smooth the path to closing. Here's how to leverage your pre-buy for financing success:

Choose the Right Inspector

Your choice of inspector matters to lenders. They prefer inspections performed by:

Ask your lender if they have preferred inspectors or inspection facilities. Some lenders maintain lists of approved inspectors whose reports they trust.

Request a Lender-Friendly Report Format

Work with your inspector to ensure the report includes everything lenders need:

Address Issues Before Submitting to Lender

If the inspection reveals issues, work with the seller to resolve them before presenting the report to your lender:

  1. Negotiate repairs: Seller fixes issues before closing
  2. Price reduction: Adjust purchase price to reflect condition
  3. Escrow arrangement: Funds held for post-closing repairs
  4. Walk away: If issues are too significant

Presenting a clean inspection report—or one with a clear remediation plan—significantly improves your approval odds.

Provide Context for Findings

Not all inspection findings are equal. Help your lender understand the significance of any issues:

A brief cover letter explaining the inspection results and how any issues have been addressed demonstrates professionalism and helps the lender process your application efficiently.

Timing Your Inspection

Coordinate your pre-buy inspection timing with your financing timeline:

For a complete timeline guide, see our article on aircraft purchase timeline from LOI to closing.

The Pre-Buy as Negotiating Tool

A thorough pre-buy inspection often reveals issues that justify price negotiations. Use findings strategically:

A price reduction based on inspection findings can improve your loan-to-value ratio, potentially qualifying you for better terms or a lower down payment.

Calculate Your Aircraft Loan

Use our free calculator to estimate payments and see how purchase price adjustments affect your monthly costs and total interest.

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Building Your Pre-Buy Team

A successful aircraft purchase requires coordination among multiple professionals:

Experienced professionals who work together regularly can streamline the process significantly. Ask your lender for referrals to trusted partners.

Post-Inspection Checklist for Loan Approval

Before submitting your loan application with the inspection report, verify:

What Happens After Lender Review

Once the lender reviews your inspection report, expect one of these outcomes:

  1. Approval as submitted: Inspection supports the deal—proceed to closing
  2. Conditional approval: Specific items must be addressed before closing
  3. Modified terms: Loan amount or terms adjusted based on findings
  4. Request for additional information: Lender needs clarification on specific items
  5. Decline: Inspection reveals issues that make the aircraft unfinanceable

Most applications fall into categories 1-4. Outright declines are relatively rare when buyers have done proper due diligence before making an offer.

Final Thoughts

The pre-purchase inspection is your opportunity to verify the aircraft's condition and your lender's opportunity to verify their collateral. By understanding what lenders look for and presenting a thorough, well-documented inspection report, you significantly improve your chances of a smooth approval and closing. Remember: lenders want to make loans—help them say yes by giving them the information they need to feel confident in the aircraft's value.

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