Financing Troubles for student pilot...to be...

[CBorstein]

I am trying to begin my pilot training at a great part 61 school, The Palo Alto Flying Club in the Bay Area. The problem is that the school does not have any financing options available. I have been calling banks to set them up with PAFC, like Sallie Mae and Key Lend, but everyone says the school does not qualify. The only one with hope is Sallie Mae. What can I do? Can anyone help? Thanks,

Chad

 

[Vik]

This isn't meant to be a d!ckhead response, but switch to another school that is good and allows you to qualify for financial aid. Don't make this complicated.

 

[Cutlass1287]

Or you could just get a credit card.

 

[ParrotheadPilot]

Or you could just get a credit card.

Have fun paying interest out the arse!

 

[User546]

Don't even put that in the kids head! Do a credit card re-payment schedule on what $50,000 will be in 10 years! If you dont have the money to pay off the credit card now, I promise you wont in 10 years!

I would recommend talking to some local banks and see what kidn of low interest rate you can get on a bulk flight training loan, or like everyone else said GO to a school that has financing.

I personally deal with KeyBank and there a pain in the butt, however that was the only way I could've made it thru my training. Plus the bigger institutions liek that work with you if you become unemployed or can't meet the montly payment. They'll normally let you make minimum payments, or give you a forebarance that allows you to skip a month if you are unemployed. Won't find that with most banks.

And in the world of aviation, ESPECIALLY starting out... you need that kind of lee-way! Because your going to have a house-payment sized monthly payment when its over with if you go all the way thru.

Just my .02

 

[350DRIVER]

Pilot Finance. Probably one of the more affordable ways to do this and your monthly payments will be relatively low with a decent rate.

http://www.pilotfinance.com/pages/539359/index.htm

good luck,

3 5 0

ps> do not use a credit card unless you can pay if off before the interest rates kick in or else this will bury you.

 

[HMR]

Don't even put that in the kids head! Do a credit card re-payment schedule on what $50,000 will be in 10 years! If you dont have the money to pay off the credit card now, I promise you wont in 10 years!

I would recommend talking to some local banks and see what kidn of low interest rate you can get on a bulk flight training loan, or like everyone else said GO to a school that has financing.

When I was in the same spot I checked my bank (9%), Sallie Mae (15%), and some other student loan co.'s (15-20%). Seemed alot cheaper to use a credit card. I maxed out 4 credit cards. Then I called each company and said "if you don't lower my rate I'm transferring my balance to another card". All four obliged. Two went to 0% and the other two were 3-4%. Saved me a bundle over any other loan option. Be careful, do alot of research. If you don't read the fine print you could end up with a 30% interest rate. The credit card option worked great for me.

 

[FlyGirlFelicia]

Personally, I have gone with Key Loan and they have been very good. My rate is about 7%, which is pretty good, I think. I would NOT suggest using a credit card for flight training, I have a few friends who are totally ruining their credit trying to pay it all back on Regional Airline saleries. But definitely pick a flight school that is familiar with (and accepts) flight loans, I think you will be a lot happier.

 

[HMR]

I would NOT suggest using a credit card for flight training, I have a few friends who are totally ruining their credit trying to pay it all back on Regional Airline saleries.

I’m pretty good at math but I need help on this one: How is a 7% Key loan easier to manage than a 0% or even a 4% credit card? Is the interest tax deductible? If so it might make sense. Otherwise, it sounds like the same jive the loan representatives used to use on my students when they talked about the “evils” of credit cards. I did a lot of research before jumping in and as a result I have an excellent credit score. The only thing I would have done differently is take advantage of more offers for airline miles.


As for the regional pilots who are “totally ruining their credit”- Give me a break. At what point did they realize they wouldn’t be able to make their payments on regional FO pay? I hope they make better decisions in the cockpit than they did with their finances/careers. Again, how would having a high interest Key or Sallie Mae loan help their situation?



Chad- Keep researching this topic. Whatever you decide, KEEP YOUR COSTS DOWN during training. Fly the cheapest C150 or 152 you can find for your private. Stay away from that shiny new Cirrus or C182. You don’t need any of those bells and whistles for your private. Come to class prepared and keep a close eye on what your CFI is billing you. I gave this same advice to my own students (I had to learn the hard way) and that’s why so many of them are now good friends. Good Luck!

 

[qmaster3]

Just an option. Join the Air Force, Navy, CG reserves. You will have min. Obligations. The GI bill will cover 60% of your training after your private. You can use your Drill pay to cover the rest. To me it's better than having 50,000 big ones to pay off.

 

[FlyGirlFelicia]

I was just speaking from my own experience with loans, the 7% fixed is lower than any credit cards I have (highest at 9.9%) so I went that direction. Payback can also be deferred the 1st 6 months out, and may qualify for further deferment if you decide to go back to school. I don't know of any credit cards that allow for that.

 

[Vik]

Credit cards work depending on how much of a limit they are going to give him.

It is best to get a student loan payable over 10-15-20-25-30 years. So your monthly payment initially is not a whole lot. Make sure there isn't a prepayment penalty either. That way when you start earning "the big bucks" your first year at a regional, you can start paying it back faster.

 

[Vik]

Oh yah, whatever you do, do not get a loan for $20k and sign it over to your school.

What was the name of that school in Florida .. ATA? that went broke after taking $30k from a bunch of students.

 

[saabass]

I’m pretty good at math but I need help on this one: How is a 7% Key loan easier to manage than a 0% or even a 4% credit card? Is the interest tax deductible? If so it might make sense.


The Key Loan is considered a student loan and it's interest is tax deductible. The rate for key varies on the LIBOR rate (mine does) which is a pretty stable. I think it is the Libor + 1% which is approx. 5.5%. Key also doesn't require repayment until you have completed your training....

Credit Cards may start at 0-7%... but once you have a large balance, and you are a couple days late with your payment- you get hit with the old 21%. None of this interest is tax deductible.

 

[HMR]

The Key Loan is considered a student loan and it's interest is tax deductible. The rate for key varies on the LIBOR rate (mine does) which is a pretty stable. I think it is the Libor + 1% which is approx. 5.5%. Key also doesn't require repayment until you have completed your training....

Credit Cards may start at 0-7%... but once you have a large balance, and you are a couple days late with your payment- you get hit with the old 21%. None of this interest is tax deductible.

The Key loan sounds like a good deal. FWIW, I've had a CitiCard for the past five years that's still at 0%. Everytime they try to raise the rate I just ask for it to stay at 0% or else I'll leave. Works everytime.

I've never missed a payment. If you have trouble paying your bills on time- stay away from credit cards.

 

[bobs98tlr]

qmaster3 is right, join the military....Air National Guard/Army National Guard/Air Force whatever. Im just about done with my Commerical and im finally about to leave for the Air National Guard. I was gonna go active Air Force but thats another story. The ANG will pay for school and 60% of any training after your private AT a school that is approved. However, the Illinois ANG will pay for your school and flight lessons at an approved school come June 1, 2005 i believe. Very cool deal that i hope to get in on.

Otherwise, switch schools and get the key bank loan or sallie maye. I messed up my credit 3 years ago over stupid stuff when i was at a 141 school. DONT put flying lessons on credit cards. Good luck.

 

[Panda]

The Key Loan is considered a student loan and it's interest is tax deductible. The rate for key varies on the LIBOR rate (mine does) which is a pretty stable. I think it is the Libor + 1% which is approx. 5.5%. Key also doesn't require repayment until you have completed your training....

Credit Cards may start at 0-7%... but once you have a large balance, and you are a couple days late with your payment- you get hit with the old 21%. None of this interest is tax deductible.[/QUOTE]
You may want to consult with a tax accountant in regards to the deductability of the interest of a student loan. For one, you will need to itemize your deductions which in turn may or may not be in your best interest (depending on your income.)

Also, the "Key Loan" will probably have the interest capitalized. What this means is that although you are not required to make any payments until you are done with training, the loan still earns interest that is tacked-on to the principal amount (the original amount that you borrowed.) Bottom line is that you need to do your homework. If you borrow $50,000 at 5.5% for 7 yrs, this would equal to a $720 per month payment. That's half of a first year Regional FO salary. I imagine that CFI income will be even tighter.

On the other hand, training with Uncle Sam is free. Look at all your options.

Best of luck.

 

[CBorstein]

The military is one of my main goals. I am currently in the Army Reserve and want to transition to aviation, but it is VERY competitive, to say the least. Having my private pilots license before I apply will increase my chances infinitely. Then finish my time in the military and transition to a regional. Nice to have goals in life.....