Financing a Co-Owned Aircraft: How Lenders Handle Group Loans

This guide is for two or more pilots financing one airplane together. It covers who the borrower is, what each partner guarantees, how lenders underwrite a group, and what happens to the loan when a partner wants out before it's paid off. Buying into a group that already owns an airplane is a different problem, covered in how to finance a partnership share.

Who is the borrower on a co-owned aircraft?

There are four common structures. The first is by far the most common for groups financing a piston single.

For the LLC route, the entity has to be able to register the aircraft with the FAA, which generally means meeting the U.S.-citizenship tests for entities. Lenders also want to see the articles of organization, the operating agreement, proof of good standing and a resolution authorizing the loan and naming who signs. Entity setup is covered in LLC ownership structure.

What does "joint and several" mean for each partner?

This is the single most important thing to understand before a group borrows. Take three partners buying a $200,000 airplane with 15% down ($10,000 each) and a $170,000 loan at 8.00% over 20 years:

The lender doesn't care how the partners split the payment internally. If one partner stops paying and the others don't cover the gap, the loan is in default for everyone. Two protections belong in your partnership agreement:

• Contribution clause: any partner who pays more than their share can recover the excess from the others, secured by their interests.
• Default remedies: notice, a cure period, suspension of flying and a forced buyout of a non-paying partner. See the aircraft partnership agreement checklist.

How do lenders underwrite multiple partners?

The LLC usually has no income or credit history of its own, so lenders look through it to the people. Expect each guarantor to go through something close to an individual application.

• Credit: AOPA Aviation Finance's president has said deals are difficult to secure below 680 and that a 730 score is as good as an 800 (NAFA, 2022). FLYING Finance prices tiers at 780+ and 730–779 and puts borrowers below 730 in a tier at base rate plus 2% (August 2026). In a group, ask whether the lender prices off the strongest guarantor, the weakest, or a blend.
• Income and debt-to-income: lenders differ on whether each guarantor must carry the full payment or only their share. See the example below.
• Liquidity: cash for each partner's share of the down payment, plus reserves after closing.
• Pilot experience and insurability: the aircraft must be insurable with every partner named, and the lender added as loss payee.
• The documents: the operating or co-ownership agreement, especially transfer restrictions, default remedies and who can sign for the LLC.
• The aircraft: the same appraisal, logbook and title review as any purchase. See pre-buy inspection checklist.

Debt-to-income example. Take a guarantor with $12,000 of gross monthly income and $3,500 of other monthly debt payments. If the lender counts only their one-third share of the $1,422 payment, their ratio is 33.1%. If it counts the full payment, as some do because the guarantee is joint, the ratio is 41.0%. Same person, same airplane, different answer. Ask which method applies before you apply. Maximum ratios vary by lender.

If one partner is weaker, the group has options. Restructure ownership so the stronger partners hold more, put more money down, add a strong guarantor, or ask the lender whether a limited guarantee is available for a small minority member. Some lenders require guarantees only above an ownership threshold, while others require every member. Policies vary. For general qualification standards, see credit score requirements and co-signers and guarantors.

What down payment, rate and term should a group expect?

The aircraft drives these more than the ownership structure does. AOPA Aviation Finance cites a minimum down payment of 15% for post-1960 single-engine aircraft, 20% for pre-1960 aircraft, and 15% to 30% for twins depending on age. It lists terms of 5 to 20 years for singles, with 20 years only on loans of $75,000 and above, and maximum terms of 10 to 15 years for multi-engine aircraft. As of September 2026, FLYING Finance lists certified piston rates from 7.01%, and AOPA quotes 6.99%–9.99%.

Loan amount $170,000. Principal and interest only; excludes insurance, taxes and fees. Illustrative, not a quote.

Shorter terms raise the payment but build equity faster. That matters in a partnership, because a partner who leaves after a few years takes out only the equity actually built. For how term length affects total interest, see aircraft loan terms explained.

How is a group loan secured and recorded?

• Security agreement: signed by the LLC, or by every co-owner, and covering the whole aircraft, not a fraction. It is recorded with the FAA Aircraft Registry under 14 CFR Part 49. The fee is $5 per item of collateral (aircraft, engine, propeller). See the FAA's recording guidance.
• Guarantees: a separate personal guaranty from each member. These aren't recorded at the FAA.
• Insurance: hull coverage with the lender named as loss payee, and liability coverage naming the LLC and all partners.
• Covenants: expect restrictions on transferring membership interests, adding liens, changing the base airport or leasing the aircraft without consent.

For the recording mechanics, see aircraft security agreements and the closing process.

What happens when a partner exits mid-loan?

Partners leave for ordinary reasons: a job move, a lost medical, a new baby, a divorce. The loan doesn't care. Here is the same three-way group, 36 months in. The airplane is now worth an assumed $195,000 and the loan balance is $158,301.

Note how little equity three years of a 20-year loan builds. The departing partner put in $10,000 down plus $17,063 of loan payments, and leaves with about $12,233 before fees, because most of those early payments went to interest. The four ways out:

1. Remaining partners buy the share. Each pays $6,117 in cash. Their budgeted share of the loan payment rises from $474 to $711 a month. The lender must agree in writing to release the departing guarantor. Until it does, that person is still liable, and the lender may re-underwrite the remaining two.
2. A new partner buys in. The newcomer pays the departing partner, signs a new guarantee, and is underwritten by the lender, which then releases the departing partner. This keeps everyone's payment at $474. Newcomers often have to fund the buy-in outside an aircraft loan. See financing a partnership share.
3. Refinance to cash out the departing partner. Folding the $12,233 buyout into a new loan would need $170,534, or 87.5% of value. If the new lender caps the loan at 85% ($165,750), the group still has to bring $4,784 in cash. The capped loan over the remaining 204 months at 8.00% would be $1,489/mo, split two ways. See refinancing an aircraft loan.
4. Sell the airplane. Proceeds pay off the loan first, then are split under the agreement. Selling costs come out of everyone's equity.

Watch the transfer covenant. Many loan documents treat a change in LLC membership, or a transfer of a co-owner's interest, without lender consent as a default. Tell the lender before the paperwork is signed, not after.

What if a partner dies or defaults during the loan?

• Death: the loan agreement may treat a guarantor's death as a default event or require a replacement guarantor within a set time. The estate generally remains liable on the guaranty. A buy-sell clause funded by life insurance lets the survivors buy the share and keep the loan current.
• Payment default by a partner: the other partners should keep the loan current first, then pursue the defaulting partner under the agreement. A late group payment damages every guarantor's credit.
• Bankruptcy or divorce: a partner's interest can be pulled into proceedings. Transfer restrictions and a group purchase option protect the others. The lender's consent is still needed for any change.

How do you get a group loan approved?

1. Agree on structure and terms first: the LLC or co-ownership, percentages, and who guarantees.
2. Draft or review the agreement with an aviation attorney, including transfer, default and contribution clauses.
3. Collect each partner's file: credit authorization, tax returns, income documents, bank statements, personal financial statement, and pilot certificate and logbook summary.
4. Pre-qualify. This typically takes 1–3 business days, and it surfaces a weak file before you make an offer.
5. Get insurance quotes with every partner named.
6. Sign the purchase agreement with financing and pre-buy contingencies. Underwriting typically takes 1–2 weeks once there's a purchase agreement.
7. Close: the LLC signs the note and security agreement, each member signs a guaranty, and the lien and registration are filed with the FAA. Closing typically runs 2–4 weeks from application.

How this guide differs from related guides

This page covers one loan for a whole group. For buying a single share of an existing partnership, where most aircraft lenders won't help, see how to finance an aircraft partnership share. For what each partner pays per year and per hour, see the aircraft partnership cost breakdown. For the clauses that make a group loan work, see the aircraft partnership agreement checklist. For whether to share at all, see aircraft partnership vs sole ownership. To model a payment, use the aircraft loan calculator.

Frequently asked questions