Should you buy your private jet in cash?

Steve, I'm about to buy my first jet. Should I pay cash or should I finance it?

I really think it depends. If you can make more money than they're going to charge with the bank, obviously then borrow the money. But I'd say about 80% of the people finance airplanes just because they can make more money with their own money, so they use the bank's funds.

It really depends on what the best use of your cash is to finance a jet. How does it work? It depends on how old the airplane is. Usually, you could borrow between 50% and 90% of the cost of the airplane, and then they usually advertise the loan over 5 or 10 years. The interest rate depends big time on what your credit level is like.

Is there ever a time where you suggest I pay cash?

Yeah, sure. Because if you get an older airplane or you get an airplane that's, let's say, under $5 million, the banks don't really want to finance you because it's too much work. It's the same amount of work to do a $5 million loan as a $50 million loan, and they really don't want to do those kind of low number loans. So it's best if you use cash on a small airplane.

Thanks, Steve. That's why I always choose the jet business.