How Changing Interest Rates Could Impact Your Aircraft Purchase or Refinance

With the right strategy, financing or refinancing your aircraft before year-end can be smooth, strategic and rewarding. 

Let’s start by looking at interest rates and where they’re projected to go by December 31st. Today, rates are anywhere from 0.25% to 0.75% lower than the rates we’ve seen for the majority of 2025. 

Changing Interest Rates: What’s Next?

Revised labor data, out this month, showed 911,000 fewer job creations than initially estimated by the U.S. Bureau of Labor Statistics. 

This, combined with inflation data showing the core Consumer Price Index (CPI) rose 3.1% compared with last year, allowed the Federal Reserve to make a 0.25% rate cut last week. The rate cut signals that the Fed believes there’s more downside risk in the labor market. But they aren’t committing to any major adjustments while inflation is still coming in hotter than their 2% target. 

Usually, the Federal Open Market Committee (FOMC) shares guidance on expectations for future monetary policy adjustments with a briefing from the Fed chair, Jerome Powell. The committee also releases the “dot plot,” which shows members’ expectations of where rates will go over the next few years.

The guidance from this meeting, however, was a bit fuzzy, as we continue to get conflicting economic data and the net impact of tariffs is not yet known. 

The Fed’s latest dot plot offers no clear signal on where short-term interest rates may head next. Therefore, we will continue to keep our eye on economic data and look for clues for what the Fed will do next. What is certain is that aircraft loan rates are lower today than they’ve been for most of the year. So how can you make the most of it?

Lower Interest Rates Signal New Opportunities

Many owners pay cash or finance smaller percentages of their aircraft purchases. However, today’s lower interest rate environment might signal new opportunities. 

For example, owners can leverage equity in their existing aircraft or finance their next purchase, which frees up cash for their business or other investments. 

Additionally, borrowers may benefit from a variable-rate loan if short-term rates continue to decline. Recently, variable rates ran higher than longer-term fixed rates due to the inverted yield curve. 

By structuring an aircraft loan with a variable rate, borrowers can often reduce prepayment penalties. They may also reap the benefit from continually declining rates over time.

As we often advise, talk to your aircraft lender early and often. Together, you can strategize how to best take advantage of current interest rates and prepare for a smooth year-end purchase or refinance.

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