Updated . Educational only — not tax, legal, or lending advice. Confirm figures with your CPA, the state revenue department, and a lender before you close.
The Engine Is Half the Collateral on a Piston
Lenders do not buy “mid-time” as a phrase. They buy hours and years since overhaul, against the published TBO, with the logbooks to prove it.
How the advance moves
- Run-out. An engine at or past published TBO is a four- or five-figure invoice the next owner must pay. Appraisals reflect that. Lenders either deduct a reserve from the value or require the overhaul at closing and finance only what the fresh engine supports.
- A recent overhaul with a reputable shop, a warranty you can transfer, and the 337 or log entry in the book supports a higher value than the same airframe with a “top overhaul” story and no paperwork.
- Programs that bill an hourly engine reserve (more common on turbines, sometimes mimicked by owners on pistons) help a lender believe the overhaul will be funded. The reserve only counts if the money is actually segregated and assignable. A spreadsheet is not a reserve.
What to put in front of the appraiser
Last overhaul date, total time, time since overhaul, compression trend, oil analysis if you have it, and any prop strike or shock load. Hiding a prop strike is how deals die in title and in court. It is not a financing tactic. Use the calculator twice: once at the asking price, once at the asking price minus a realistic overhaul. If you can only afford the first payment, you cannot afford the airplane.
See also high-time engines.
Questions buyers actually ask
Does “factory reman” always beat a field overhaul for the lender?
It is easier to describe and usually easier to warranty. A documented field overhaul from a known shop is still acceptable collateral. An undocumented one is not.
Will the lender escrow an overhaul reserve for me?
Some fleet and turbine structures do. Most piston purchase loans expect you to budget it yourself or to complete the overhaul before funding.