Repossession is nine-tenths of the
law
How do you get a low-cost car loan? It's
not just your good credit.
For inexpensive car loans, you need laws that make the lenders feel
secure, essentially by protecting their right to the asset as collateral
if the buyer can't make payments. The same is true for airplane loans.
In the United States, lending laws give airplane financiers security.
But there is no equivalent provision in international law.
Scott Scherer, vice president of Aircraft Financial Services for Boeing
Capital Corporation, said the lack of guaranteed security in international
markets makes aircraft loans difficult to obtain. When loans are granted,
they usually come with high financing costs. And if an airline can't
afford these terms, it means lost sales for Boeing and lost economic
opportunities for international customers and the people they serve. "The
more risk there is, the
higher the cost," said Scherer.
FULL STORY >>
Let's discuss money:
The talk of finance
Those involved in the aircraft financing market use specific terms in
their everyday business routines. Some of these terms may seem familiar
to anyone who's taken out a loan; others are more germane to the finance
industry. Here's a list of a few common financial terms that relate to
the Cape Town Convention (see story at above)
Asset: Any possession that has value in an
exchange.
Asset-based financing: Methods of financing in which lenders and equity
investors look principally to the value of a particular asset as security
for their financing in the event of a
default by the borrower.
Collateral: An asset that can be repossessed if a borrower defaults
(fails to make the timely
payment of interest or principal).
Export-Import Bank: A bank established by the U.S. Congress to encourage
trade with other countries by supporting the financing of U.S. goods
and services.
Risk: The degree of uncertainty of return on
an asset.
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