Refinancing a Private Jet Loan: When and How
Optimise your private jet financing: lower costs, reset terms, and unlock equity.
Securing a private jet represents a substantial capital outlay, often financed over several years. While the initial loan structure may have been optimal at inception, market dynamics and the owner's financial objectives evolve. Refinancing offers a strategic opportunity to recalibrate these arrangements.
How it works
Refinancing involves replacing an existing aircraft loan with a new one, typically from a different lender or under revised terms with the incumbent. The primary drivers are often lower interest rates, extended tenor, or a desire to release equity. With current rate cuts, a significant arbitrage opportunity may exist to reduce the cost of capital. A new facility can also be structured to reset covenants, align with new corporate strategies, or accommodate a change in the aircraft's operational profile.
The process typically involves a re-evaluation of the aircraft's current market value, an updated credit assessment of the borrower, and negotiation of the new loan's terms. Equity release, for instance, allows a borrower to take cash out against the aircraft's appreciating value or existing unencumbered equity, often up to 60-70% Loan-to-Value (LTV) of a revised appraisal. Depreciation schedules, typically 15-20 years for tax purposes, can also influence the appetite for refinancing, particularly if the initial loan was short-term.
Typical terms in 2026
Whilst market conditions are fluid, 2026 is projected to offer attractive refinancing conditions. For a pre-owned, in-production business jet, expect the following ranges:
| Tenor | LTV Range | Rate Range (SOFR/EURIBOR + Margin) |
| :----------- | :-------- | :--------------------------------- |
| 5-8 Years | 65-75% | 3.25% - 4.75% |
| 9-12 Years | 55-65% | 4.00% - 5.50% |
Residual value assumptions play a critical role, with many lenders underwriting against a 10-year residual value of 35-45% for high-demand models. Loan sizes for large cabin jets typically range from USD 25 million to USD 75 million.
Who it suits
Refinancing is ideal for high-net-worth individuals, corporate flight departments, or fractional ownership schemes seeking to optimise their balance sheet. Owners who secured loans during periods of higher interest rates (e.g., 2023-2024) stand to benefit substantially from current or anticipated rate reductions. Furthermore, those requiring more flexible covenants, an extended repayment schedule to improve cash flow, or the release of equity for other investments will find refinancing a powerful tool. It is particularly pertinent for aircraft approaching a major maintenance event, as fresh capital can be raised to cover such expenditures.
Pitfalls to avoid
Careful consideration of break clauses and prepayment penalties in the existing loan agreement is paramount. These can often negate the benefits of a lower rate. Ensure the new facility's legal and arrangement fees do not erode the savings. A thorough due diligence on the new lender's experience in aviation finance is also crucial. Over-leveraging the asset, even with attractive terms, can create future vulnerabilities, particularly if residual values decline unexpectedly.
How Mega Aviation helps
Mega Aviation, through its extensive network, introduces clients to vetted lenders and lessors specialising in private jet finance. We streamline the initial engagement, ensuring you connect with providers offering terms aligned with your specific requirements. It is important to note that Mega Aviation operates purely as an introducer and does not act as a regulated financial adviser. Our role is to facilitate efficient market access for your refinancing objectives.