Looking to buy your own personal plane? Yeah…me neither. But for those of us who are, credit unions have you covered! A recent report by CU Journal revealed that credit unions in states such as Florida, Minnesota and Alaska are offering more and more consumer loans for airplanes. While aircraft loans are usually hard to come by, credit unions are “working to change that perception.”
So instead of providing loans to people from communities of modest means whom they were established to support (and given a tax exemption to make happen), credit unions are targeting a very niche network of millionaires who can afford to buy crazy luxurious items like planes for their own convenience/pleasure. Makes perfect sense!
Even more ridiculous? Some of these credit unions are trying to make the claim that because they were originally chartered to serve specific airline employees as their common bond mark, it’s within their scope to serve the aviation-interested wealthy. Covering these two very different groups under the same umbrella is not only unfair but also insulting to the hardworking airline employees who deserve much better from an institution created to help them.
And by analyzing the cost of these planes alone, it’s obvious the people setting out to purchase them are of high net worth. The price tag of the planes has nearly doubled since the recession, with the basic model going from $328,000 in 2007 to $662,000 in 2017. In some cases, credit unions have provided up to $600,000 in aircraft loans. That’s $600,000 that could instead benefit so many individuals’ and families’ real needs– but instead is being used to fulfill a single person’s need for speed.
Not only are these loans risky because of their sheer cost — the planes are extremely hard to recover if they are damaged in the slightest. And even worse, if an owner defaults on the loan, the planes are nearly impossible to re-sell in the market, according to the marketing research firm Bancography. It’s the taxi medallion story all over again – but on a more expensive and extravagant scale.
Credit unions cannot be shelling out taxpayer-backed dollars for rich people to buy toys. Can you imagine if any other nonprofit organization dedicated to supporting poor communities began publicly using its funds to help billionaires buy yachts? The nonprofit would immediately be smacked with major regulations and legal fees. So why are we letting credit unions get away with this behavior? Providing loans to finance rich people’s hobbies is hardly a way to better a community or the country at large.