Financing

I'm going to touch on a slightly "taboo" subject today... money.

So this is going to be another mostly off-topic post, at least as far as "building" the plane itself goes. However, you can't build a plane if you don't have the necessary parts and tools, and you can't buy parts and tools without money. Let's face it-- flying isn't exactly the world's cheapest hobby, especially if you want to own your own airplane. Even more so if you want that airplane to be nicer and newer than most rentals, and have some of the common "luxuries" you'd expect in a vehicle of any kind that costs north of six figures. Yes, building it yourself makes it more affordable than a comparable factory-built plane like the often-compared Cirrus SR22, but most of us builders don't really go this route based on financial reasons alone. Any way you slice it, you're in for a pretty hefty chunk of change by the time you get your fancy new RV-10 into the air.

That being said, you don't necessarily have to be "rich" to build your own airplane, either. We're not, anyway. Our house isn't anything fancy, and we drive beater vehicles straight out of an easy listening radio station (70's, 80's and 90's). I suppose I do have a pretty good job working as a software engineer, and yes it pays fairly well, but money doesn't exactly grow on trees around here either. I assume many other builders are in a similar situation... doing well for themselves but not exactly in a position to just shell out the money necessary to build a plane in hard cash. If you are one of those people, you're lucky, and feel free to skip the rest of this post. :-)

For the rest of us, we need to figure out a way to fund the project. Of course, strolling into your local bank and asking to speak with a loan officer, telling them you want to build an airplane in your garage, and that you need six figures of unsecured funding will make someone's day, but probably not yours. There are a small handful of financial institutions around the country that do specialize in aviation loans, and an even smaller subset of them (I've found precisely two, one through EAA and another through AOPA) that offer some sort of "aircraft construction loan" specifically for experimental aircraft. The good news here is that these companies absolutely love RV's because they have exceptional market value and excellent safety records, and are easy to assess. This translates to getting the best-case possible loan terms, which is great. However, these loans still have some pretty significant strings attached, with some examples being you need to purchase full hull in-flight insurance coverage the moment you sign the loan (big premiums, even though the plane isn't anywhere near flying condition yet), you must maintain xxx (high) amount in your checking account, and/or they need to send disbursement checks directly to the vendors to buy ALL the parts for your plane within 30 days (impossible, there are many purchases to make over many months from many vendors). Additionally, while the interest rates weren't "bad," they weren't really "great" either. So, I never ended up applying for any of these aircraft construction loans.

What I did end up doing was sometime last year I put together an incredibly complicated Excel spreadsheet (that only I understood) and planned out a revolving credit line sourced from a handful of decent-rate and high-limit credit cards, and a home equity line of credit (HELOC). I whipped up some rough numbers for time and cost, estimating the fuselage would be ordered here, the finish kit here, the engine overhaul here, etc etc. By the time the numbers came back, I had a plan that would "just barely work" by riding out the HELOC and credit cards in this gigantic torrent of revolving debt that I had concocted.

This plan has worked, in fact with a great deal of success, up to this point. Actually, it would probably continue to be successful up until completion of the project. However, it isn't ideal in my mind, and some of the credit cards involved have higher interest rates than I'd prefer. So, while continuing with this plan, I've been slowly and silently searching for a Plan B that might make things go easier for us.

In comes SoFi. Haven't heard of SoFi? Me neither, at least I hadn't until a few days ago. I got a random solicitation from them in the mail last week... you know, the ones you typically can just tell from the outside of the envelope that it's going to be in the trash in about 10 seconds. For whatever reason, I opened the letter first though. It sounded too good to be true, you can apply for a personal (unsecured) loan online in just a few minutes, and within a few days have your new loan direct-deposited in to your account. Oh yeah, and the rates were incredibly lower than any other similar loan I could find, including even the many-strings-attached aircraft construction loans. The amount you can borrow was astonishingly high too. No application fees, closing costs, origination fees, early repayment fees, fees of any kind! Ok, what's the catch? I started reading up on SoFi online and researching all that I could about them, and read all the fine print, and still wasn't scared away. Worst reviews I saw online about them were that they could be pretty selective, and they would sometimes drag on the approval process for a long time and request all kinds of documentation, and then ultimately turn you down. My credit is very good but not unrealistically high or top-echelon by any means, but I thought what the heck, I'll apply and see what happens, what's the worst that could happen?

Here was my application experience, literally: I went to the website and followed the steps to apply for a personal loan. They needed precisely *two* documents: a current pay stub and a scanned copy of my passport. Within 10 minutes, the application was complete and it was in for the approval process. Within 48 hours, I was approved and had the funds sitting in my bank account. For taking 10 minutes out of my day, I've just sliced my interest rates in half and fully funded the rest of my build, with plenty of headroom to spare now. What's significant about this is that the amount and terms of this loan are completely untouchable by any other bank I have seen, plus because it's a personal loan they don't even need collateral in the airplane. The rates are *almost* good enough where I just might consider not even refinancing when the plane is flying!

If you're in a similar situation as the one I described above, I'd highly recommend checking out SoFi. You can even click a referral link here, and you'll get $100 (I'll get a few bucks too). If doing the referral thing isn't your thing, I understand, honestly I always tend to roll my eyes at these kinds of deals. So here's a link to just go to their website at sofi.com, Either way you might find a surprisingly good deal. I know I did.

That's all for now.. next time we catch up I just might start finally attaching the cabin top to the fuselage!!!