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I'm a pilot. I'm considering maybe possibly building my own airplane from a kit. The problem is that the airframe, engine, propeller, and avionics all come from different suppliers. I don't want to have four different loans, with four times the payments, plus the hit to my credit rating that would cause, plus the risk that I could be turned down for one (for whatever reason), leaving me with an expensive but useless partially-assembled plane in my garage.

So, is it possible to get one single loan to buy all four pieces, with all four pieces as collateral, even though they all come from different companies? And would it be a good idea to do so, or is there another way to avoid the problems mentioned earlier?

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    You could get a loan using something else as collateral, such as a HELOC...
    – keshlam
    May 4, 2023 at 4:55
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    This is something you should ask your bank. Although most banks probably won't have any "aircraft construction loan" plans in their catalog. So this might require some negotiating.
    – Philipp
    May 4, 2023 at 12:35
  • It's possible to get one loan for an entire business, out of which you're paying for paper clips and salaries.
    – Kaz
    May 5, 2023 at 21:09

2 Answers 2

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So, is it possible to get one single loan to buy all four pieces, with all four pieces as collateral, even though they all come from different companies?

You ask if this is possible. Yes, it's possible IF you can find a lender who is willing to loan you the money with various pieces of an aircraft as collateral. You may not find any lenders willing to do this or if you do it may be very expensive until there is a completed aircraft for them to hold the lien on. This sort of thing is common with home construction where you get a loan at a relatively high interest rate to cover the risk as the home building progresses and then once it's finished you get a regular mortgage on the home.

And would it be a good idea to do so, or is there another way to avoid the problems mentioned earlier?

I think this is an opinion and so I will give you mine. No, this is not a good idea. You will likely have to put something else up as collateral, perhaps even your home, in order to get this loan. Save up your money and pay cash for this project.

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    Or take an unsecured loan
    – Dale M
    May 4, 2023 at 2:40
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    Of course the problem with unsecured, apart from higher interest rates, is that lenders generally only make this type of loan to borrowers who don't really need the money.
    – jwh20
    May 4, 2023 at 10:24
  • Presumably the key difference here is that it's easy to sell an unfinished house; there's enough of a market for that.
    – MSalters
    May 5, 2023 at 13:15
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According to an article from AOPA, there are kit-build aircraft loans available - these are akin to home build construction loans. Disbursement of funds is contingent on build milestones being met, and the loan can be converted to a conventional loan once the aircraft is complete and certified airworthy. The article indicates that, compared to conventional loans, interest rates are higher (2.5 - 3 percentage points higher), as they are riskier for the bank, and terms are shorter (to incentivize the builder to get the aircraft complete) - typically 3-5 years. It also says these are not common, so you may need to shop around a bit.

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