7 PDP Financing Terms Buyers Should Compare

Terms That Determine Pre-Delivery Financing Risk

7 PDP Financing Terms Buyers Should Compare is aimed at new-aircraft buyers comparing progress-payment facilities before aircraft delivery. Each item below can change cash flow, enforceability, technical exposure or exit value even when the headline commercial terms look straightforward.

For adjacent transaction work, ACMI World covers aircraft acquisition financing, private jet lenders, private jet refinancing. Use those pages to place each term inside the wider aircraft transaction rather than reviewing clauses in isolation.

Transaction Review

Convert Every Clause Into a Cash or Control Question

Ask who controls the decision, who pays when the event occurs, which documents prove compliance, and what happens if the aircraft cannot be operated, financed, transferred or returned as planned.

The 7 Points to Review

#1

Advance Percentage

The lender may finance only a portion of eligible progress payments, leaving the buyer to fund the balance as equity.

#2

Eligible Pdp Definition

Define which OEM deposits and progress payments qualify for lender advances.

#3

Interest On Drawn Amounts

Interest normally accrues on funded progress payments as the aircraft moves through production.

#4

Commitment Fee

Undrawn committed capital can carry a fee during the build period.

#5

Oem Consent Requirements

The purchase agreement may restrict assignment, requiring manufacturer acknowledgment or consent to lender security.

#6

Purchase-Agreement Security

The lender may take security over contractual rights, refunds and deposits before a completed aircraft exists.

#7

Delivery Takeout Mechanics

The facility needs a clear repayment or conversion path into permanent debt or lease financing at delivery.

How to Use the List in a Live Transaction

Turn the list into a diligence schedule. Record the current contractual position, requested change, responsible adviser, required evidence and financial consequence for every open item. That keeps legal language tied to operational and economic outcomes.

Review Discipline

• Quantify the cash effect of every material clause
• Assign each diligence item to legal, technical, tax or finance workstreams
• Track documents and evidence rather than relying on representations
• Model downside cases before agreeing deposits or termination amounts
• Confirm closing and post-closing responsibilities in writing

Frequently Asked Questions

Should these points be negotiated before a term sheet is signed?

Where possible, yes. Commercial leverage is usually stronger before the parties have invested heavily in documentation, inspections, positioning or closing work.

Can standard-form aircraft documents be accepted without changes?

Standard forms are useful starting points. The final document still needs to reflect the aircraft, jurisdiction, credit profile, operating model and negotiated economics.

Which issues usually create the largest unexpected cash exposure?

Maintenance, deposits, minimum utilization, tax, insurance, early termination, redelivery and technical findings frequently create larger cash effects than headline rent or interest alone.

Who should review the final transaction documents?

Aircraft counsel, tax advisers, technical representatives and financing professionals should review the areas within their scope before closing.