Last updated: • Not financial advice
What Is LTV and Why It Matters
Loan‑to‑value (LTV) is the loan amount divided by the lender’s view of the aircraft’s market value. It sets the ceiling on how much you can borrow. Lenders vary by aircraft type, age, and market liquidity. A late‑model SR22 may see higher LTV caps than a high‑time vintage twin; a PC‑12 or TBM often commands favorable LTVs due to strong resale markets.
How Lenders Determine Value
Value can come from pricing guides, recent comparable sales, and independent appraisals. Many lenders blend sources and adjust for options, avionics, engine/prop times, and maintenance status. Missing logbooks, corrosion, or over‑TBO engines depress value and thus LTV headroom. Get ahead of issues with clean documentation and photos.
- Guides and comps: Useful baseline; comps should be recent and truly comparable (year, time, equipment).
- Independent appraisal: Often required at higher balances; USPAP‑compliant reports carry weight. See the Appraisal Foundation (USPAP).
- Registry/title checks: Lenders and escrow verify liens and ownership via the FAA registry.
Appraisal Approaches
- Market approach: Compares recent sales of similar aircraft, adjusting for options and condition.
- Cost approach: Reproduction/replacement cost less depreciation; informative for newer aircraft or unique mods.
- Income approach: Used selectively where aircraft generate predictable cash flows (e.g., charter operations).
Programs and Upgrades
Engine and maintenance programs can support value and buyer confidence, though not always dollar‑for‑dollar. High‑quality avionics upgrades (WAAS/LPV, ADS‑B, modern glass) improve marketability; interior refreshes help but may have lower value retention.
Typical LTV Ranges
Ranges vary, but 70–85% is common for many piston and turboprop transactions; jets vary more widely with model, age, and market. Special‑use, experimental, or older aircraft can see lower caps (50–70%). These are directional, not promises; your underwriting profile and the aircraft’s condition drive specifics.
Documentation That Moves the Needle
- Complete logbooks with clear, chronological entries; proof of AD compliance.
- Maintenance records: recent inspections, component times, and major repairs.
- Avionics/option lists with serials; photos of panel, exterior, interior, logs.
- Title search, escrow details, and registration information.
Strategies to Strengthen LTV
- Model selection: Favor liquid models with robust demand. See type differences.
- Maintenance currency: Address overdue items pre‑appraisal when possible; engine programs can help.
- Down payment: Increase equity to reduce LTV pressure; review down payment norms.
- Structure: Consider a balloon to fit cash flow while preserving underwriting comfort.
When the Appraisal Comes In Low
If value prints below expectations, you have options: add cash to maintain LTV, negotiate price, change collateral, or adjust structure (term/balloon). Ask the appraiser about comps used and whether recent market data supports a reconsideration. Coordinate with your lender on acceptable remedies.
Prebuy Inspections vs Appraisals
Prebuy inspections validate airworthiness and uncover squawks; appraisals estimate market value. Both influence lender comfort and final terms. A clean prebuy often improves confidence and can help your case for higher LTV or better pricing.
Process Overview
- Align budget in the calculator; target a payment range and LTV that fit.
- Prepare documentation; organize logs and records.
- Engage escrow and order title; confirm registration details via the FAA.
- Appraisal scheduled; provide options lists and maintenance summaries.
- Review report; address discrepancies; finalize structure with lender.
FAQs
Do I always need an appraisal?
Not always. Smaller balances or very common models may rely on guides/comps. Many lenders still order an appraisal at moderate to large balances.
Can upgrades increase appraised value dollar‑for‑dollar?
Rarely. Avionics and interior work add value, but market absorption is partial and depends on model and buyer demand.
What hurts value most?
Missing logs, corrosion, damage history without proper documentation, and engines beyond recommended TBO commonly depress value.
Related Articles
External references: FAA Registry · The Appraisal Foundation · NBAA