22 July 2021 · Motoring Tips & Advice

What is a Chattel Mortgage?

A quick guide to vehicle financing.

You could choose to lease a business vehicle, or you may prefer to take ownership from day one. If that’s the case, a Chattel Mortgage may be the way to go.

How does a Chattel Mortgage work?

A Chattel Mortgage works a bit like your home mortgage. The lender provides funds to purchase the vehicle, which acts as security for the loan. You own the vehicle and repay the loan over the agreed time.

You can pay a portion upfront – perhaps using the proceeds from a trade-in – and then get a Chattel Mortgage to pay for the remainder. To qualify for this type of loan, your vehicle must be used for business purposes at least 50 per cent of the time.

Advantages of a Chattel Mortgage

If you prefer to own the asset outright (and have it on your business balance sheet), you should consider a Chattel Mortgage. At the end of the loan, the vehicle is yours to keep, trade-in or sell.

Benefits of a Chattel Mortgage include:

  • Fixed repayments: Your interest rate is fixed for the life of the loan, so you can budget your monthly payments and better manage cash flow.
  • Flexibility: Lower your monthly repayments by putting down equity or adding a balloon amount at the end of the loan.
  • Reduce administration: Choose from a range of services cards to charge back the vehicle expenses, making BAS reconciliation a little easier.
  • Tax advantages: Depending on the percentage of business use, you may be able to claim the GST paid and depreciation costs of your vehicle as a tax deduction.*
  • Lower interest rates: Because the vehicle acts as a low-risk security, you may get better finance terms with a Chattel Mortgage than an unsecured business or personal loan.

Talk to us

We’ve teamed up with ORIX Australia to provide our business customers with a range of flexible vehicle leasing and finance solutions.  To find out if a Chattel Mortgage is right for you, speak to our finance team today by enquiring below or call 9735 8400.

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Phil Gilbert Hyundai

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Sam Anttoun

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*Up to the luxury vehicle threshold limit. Talk to your tax agent or financial advisor about whether you can claim the upfront GST and deductions for the depreciation and interest payments for your business.