What is a Chattel Mortgage?
Under a Chattel Mortgage the financier provides the funds to the customer to buy the vehicle and the customer makes regular repayments. To fulfil terms of the agreement the car must be used for greater than 50% for business purposes. At the time of purchase the customer becomes the legal owner of the vehicle and the financier takes out a “mortgage” to secure the investment. Once the loan is paid off the customer has no further commitments to the financer. Note: the vehicle cannot be sold until the loan and any residual amount owing (balloon) is paid in full. This can be part of a trade in process.
Who is Chattel Mortgage suitable for?
A Chattel Mortgage, also known as Asset Purchase or Goods Loan, is suitable for a range of customers including sole traders, partnerships, and companies. Chattel mortgages are especially attractive to businesses registered for GST, given the taxation benefits. They also work for businesses who use the cash method of accounting as they can claim GST in the vehicle’s price upfront.
Benefits of a Chattel Mortgage
- You own the vehicle from day one.
- Offers lower interest rates, as a mortgage secures the loan
- Both the interest charged on the loan and the depreciation of the vehicle may be tax deductible
- GST on payments may be claimed back on lodgment of BAS
- Terms available from 2 to 5 years
- Final balloon payment available, lowering monthly repayments
What is a Chattel Mortgage?
Under a Chattel Mortgage the financier provides the funds to the customer to buy the vehicle and the customer makes regular repayments. To fulfil terms of the agreement the car must be used for greater than 50% for business purposes. At the time of purchase the customer becomes the legal owner of the vehicle and the financier takes out a “mortgage” to secure the investment. Once the loan is paid off the customer has no further commitments to the financer. Note: the vehicle cannot be sold until the loan and any residual amount owing (balloon) is paid in full. This can be part of a trade in process.
Who is Chattel Mortgage suitable for?
A Chattel Mortgage, also known as Asset Purchase or Goods Loan, is suitable for a range of customers including sole traders, partnerships, and companies. Chattel mortgages are especially attractive to businesses registered for GST, given the taxation benefits. They also work for businesses who use the cash method of accounting as they can claim GST in the vehicle’s price upfront.
Benefits of a Chattel Mortgage
- You own the vehicle from day one.
- Offers lower interest rates, as a mortgage secures the loan
- Both the interest charged on the loan and the depreciation of the vehicle may be tax deductible
- GST on payments may be claimed back on lodgment of BAS
- Terms available from 2 to 5 years
- Final balloon payment available, lowering monthly repayments
