Finance vs HELOC

The thoughts, considerations, ramifications and emotions behind buying a house can all be applied to buying an aircraft. These similarities can easily be extended to the financing options as well. At Beacon Aero Credit, our dedicated, knowledgeable aviation finance specialists understand the intricacies of aviation and aviation financing.

Recently the viability of using HELOCs as a means to an end with regards to financing an aircraft has been gaining interest. Interest is the pivotal word. HELOC stands for home equity line of credit. Simply stated, “home equity line”. This is a line of credit set up with a maximum draw rather than a fixed dollar amount. Much like the variable rate or interest only mortgages options, this kind of finance is attracting a lot of attention. HELOCs are a convenient and advantageous way to pay for discontinuous needs like home improvements, school tuition or even credit card debt because you only borrow and pay interest on the amount you need.

This is not necessarily true for a larger amount or a longer term and can be risky. Essentially, a HELOC is an adjustable rate mortgage. Unlike an arm however, the interest on a HELOC is calclulated on a daily rather than a monthly basis. Prime rate changes impact the HELOC’s rate immediately. If, for example, the prime rate changes on March 31, the HELOC’s rate will change April 1. Yes, there are HELOC’s with a guaranteed introductory rate similar to credit card offers, but those introductory rates are short term, just like the credit card offers. Also, ARM’s have rate adjustment caps, which limit the size of any rate change. They have maximum rates 5-6% above the initial rates as well. HELOC’s do not have adjustment caps. Their maximum rate is 18% everywhere except North Carolina, where it is 16%.

In this specialized field, experience and knowledge truly makes the difference. We know the options, we understand this segment of the market. This dual understanding results in a custom loan for you.