The assumption among first-time buyers is that private jets are purchased in cash. In practice, a meaningful proportion of aircraft above $20 million are financed, not because the buyer lacks the capital, but because financing is often the financially intelligent choice for a sophisticated balance sheet.
The logic is straightforward. Capital deployed into an aircraft is capital not deployed into a business, a fund, or an investment generating a return. For a principal whose core operations or portfolio reliably outperform the cost of aircraft financing, paying cash for a depreciating asset can be the less efficient choice, even when cash is readily available.
Aircraft loans in 2026 typically run at interest rates several percentage points above prime, depending on the buyer’s credit profile, the aircraft’s age and type, and the loan-to-value ratio requested. New aircraft from established manufacturers typically qualify for the most favourable terms, with lenders willing to finance 70 to 85 percent of purchase price. Pre-owned aircraft, particularly those approaching major maintenance milestones, see more conservative loan-to-value ratios and may carry a rate premium reflecting the lender’s higher risk assessment.
Loan terms typically run 5 to 15 years, structured around the expected useful economic life of the aircraft and its projected residual value at the end of the term. Balloon payment structures are common, where the buyer pays down a portion of the principal over the loan term with a larger payment due at maturity, often timed to coincide with a planned resale or upgrade.
The tax treatment of aircraft financing varies significantly by jurisdiction and ownership structure, which is precisely why this decision should never be made without specialist aviation finance and tax counsel. In some structures, interest on aircraft financing may be deductible against business income if the aircraft is used predominantly for business purposes and properly documented through flight logs. Depreciation schedules, whether straight-line or accelerated, also interact meaningfully with financing decisions and can materially change the effective cost of ownership in early years.
Leasing is a third structure worth understanding, distinct from financing. Operating leases allow a principal to use an aircraft for a defined term without taking on ownership or the associated balance sheet exposure, often with the option to purchase at the end of the term at a predetermined residual value. This structure appeals to buyers who want operational flexibility without long-term capital commitment, or who are uncertain about their long-term aviation needs.
For buyers evaluating a new acquisition, the decision between cash and financing should follow the same discipline as any other major capital allocation decision. What is the opportunity cost of the capital? What does the financing actually cost after tax? And does the answer change if the aircraft is held for five years versus fifteen? The buyers who get the best outcomes are the ones who treat this as a financial structuring question from day one, not an afterthought handled after the aircraft has already been selected.
