Pilot Finance Inc.

[Guest rotorflyr84]

I've been checking out some lenders to help fund my flight training, and I've been looking at Pilot Finance quite a bit. But, before I make any moves, I wasn't sure if anyone had any experiences with this lender. Any info would be great. I appreciate it! Thanks a lot everyone.

[Sparker]

No direct experience, as in I don't have a loan from them, but I called them and they said the way it works is more like a car loan than a career training loan. As soon as you get the check, they start sending bills. I think they will only finance for the PPL part, at least thats what she told me a year ago...

[JDHelicopterPilot]

They won't let you take out enough for all of your training at once. The interest rate is high as well.

Edited May 27, 2008 by JDHelicopterPilot

[Guest rotorflyr84]

Thanks guys. I'm going to call Tuesday and see what they might be able to offer me. I know a guy who's working on his CFI -H right now, that's used PF the whole time...so far he hasn't had any issues. But, I'll see what they say Tuesday.

 

Again thanks for the replies!

[PhotoFlyer]

They won't let you take out enough for all of your training at once. The interest rate is high as well.

 

+1 They don't loan enough, and the interest rates are sky high. (no pun intended)

 

One of my students was approved for $10k, but never took it out since the APR was 24%!

[finance-investment]

The interest rate is too high its better to take loan from private banks

[Spirit of '69]

The interest rate is too high its better to take loan from private banks

 

like who? r we talkin home equity loans? I got the go ahead from pilot finance for 13% interest, but didn't take it because the timing wasn't right. I have also heard that chase will do financing, but lack any details.

[Global Chopper]

I see this is an old thread now but just in case others stumble across it in the future...

 

I got a loan from Pilot Finance for my Instrument, CPL, and CFI, but indeed the interest rate was 13%. However there were a few things I wish I'd known before saying yes: First, they charge you 16% interest and then IF you don't miss any payments they refund you difference to make it equal 13%. So essentially you are loaning THEM money that you don't get back until the end... hopefully.

 

Second, they calculate their loans with the "Rule of 78", which is complicated but basically means you aren't able to pay down the principal by sending a little extra when you have it. And if you want to pay the whole loan off early you can't just pay off the remaining principle you have to pay all the FUTURE interest as well. Again they say they could send you a refund afterwards... hopefully.

 

And finally, they do not report to any credit bureaus, so paying off your loans diligently and faithfully will not help you improve your credit score or history. I found this particularly annoying since my lack of credit history (despite a good credit score, I'd never had a home or car loan) was the whole reason I was forced to go with Pilot Finance in the first place.

 

Having said all that, the company has been easy to deal with and helpful. Just make sure you are informed about all the details, even when you are excited and eager to take to the skies!

[Shaun]

Are they student loans? If not that's a huge plus, to be able to bankruptcy out of them.

 

Even if you lose all your limbs to a fishing accident and have to control a wheelchair with your tongue, you still have to make payments to private student loans.

[r22butters]

...And finally, they do not report to any credit bureaus, so paying off your loans diligently and faithfully will not help you improve your credit score or history...

 

Does that mean that if you default on the loan, it doesn't hurt your credit score?

[JDHelicopterPilot]

It would seem that way. I am suprised they don't report. I used them for my private. Although, that was before I decided to make a career out of it.

[DynamicallyUnstable]

Does that mean that if you default on the loan, it doesn't hurt your credit score?

 

Haha, not a chance. I'd be willing to bet that they'd send you to collections which would then report. Kind of like a cell phone or any other household bill. They don't report the good but if there is bad...really bad (default) they will report.

[Global Chopper]

One more update: I finally paid off my loan, and indeed by paying it off early they both discounted me for some of the interest not yet accrued (via the super-complicated "rule of 78") and refunded me the difference between 16% and 13% interest rate for having not missed any payments. In the end the loan worked for me, but it was expensive. Again I'd recommend anyone looking into getting a loan from this company to be sure to know what they are signing.

 

And lastly, no, this is NOT a "student loan", it is a "purchase". One more thing I learned about this is that they will not send you a tax form (1098-E) to allow you to deduct your interest from your income taxes like a real student loan would. Again, not the end of the world, but another thing I found disappointing.

[Zurban]

So i just got my application accepted by them but they are telling me that if i pay it off early i dont still have to pay the full interest? hmm?

[helistar]

I'm surprised when signing a loan many of you fail to understand some of the basic terminology used to calculate your interest and early payoff total... The Rule of 78 has been a standard accounting practice forever...

 

 

The Rule of 78 is a method of allocating interest charges for the life of a loan to the periods within the loan. It was developed as a simple (but inaccurate) method for calculating interest refunds in case of early repayment of a loan. The existence of financial calculators and electronic spreadsheets with financial calculation capability renders this an archaic practice. (See Compound Interest Made Simple for an easier way to find compound interest.)

 

The Rule of 78 methodology also allocates a slower payoff of the loan and higher interest charges for early payoff than using outstanding balance. This method was outlawed in the U.S. in 1992 for loans longer than 5 years. Use on loans for less than 61 months is subject to state laws.

 

Under the Rule of 78 method, interest is calculated for the life of the loan and then allocated to each month by proportion using reverse sum of the digits methodology. You start by adding up the numbers of months for the note. For example, in a 12 month loan, counting month 1, plus month 2, and so forth through month 12 is:

 

1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12

 

This totals 78, and hence the name, rule of 78s.

 

The simple interest total for the loan life (as given by the formula: Interest = Rate x Time x Principal) is divided by the sum of the digits (78 in this example) and applied in reverse proportion across the life of the loan. Thus, 12/78 of the interest applies to the first month, 11/78 to the second month, and so forth down to 1/78th at the end of the 12th month.

 

Example of Rule of 78

 

Let's look at the example of a $20,000 loan at 5% interest for 2 years. Under the Rule of 78 method, we first add up the months for the note:

 

1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9 + 10 + 11 + 12 + 13 + 14 + 15 + 16 + 17 + 18 + 19 + 20 + 21 + 22 + 23 + 24 = 300

 

Now, we calculate the simple interest total for the life of this loan:

 

Interest = Rate x Time x Principal

Interest = 5% x 2 years x $20,000

Interest = $2,000

 

Finally, we divide the interest total by the sum of the digits (300) and apply in reverse proportion:

 

Month #1: $2,000 x (24/300) = $160

Month #2: $2,000 x (23/300) = $153

Month #3: $2,000 x (22/300) = $147

Month #4: $2,000 x (21/300) = $140

……..

Month #22: $2,000 x (3/300) = $20

Month #23: $2,000 x (2/300) = $13

Month #24: $2,000 x (1/300) = $7

 

As you can see, the amount of interest in the Rule of 78 is higher in the beginning and reduces over the life of the loan.

 

A point for multiple choice exams - the rule of 78 does NOT refer to the year the rule was adopted or banned.

 

A last important lesson: the Rule of 78 doesn't need to have the number 78 in it!

[HoverMatt]

I am surprised you think potential helicopter pilots would be familiar with standard accounting practices.

[helistar]

Now that's funny... However, asking questions and making sure you understand the terms before signing any loan agreement should be a no brainier... Practice due diligence and using common sense will save you a lot of heartache and money in the future...