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Chattel Mortgage
A chattel mortgage is a type of business loan used to purchase vehicles or equipment. You own the asset from the start, while the lender holds it as security until you repay the loan.
How Does a Chattel Mortgage Work?
- Choose your asset: Select the vehicle or equipment you want to purchase for your business.
- Arrange finance: The lender finances the purchase, and you take ownership of the asset while the lender holds a .
- Make repayments: Repay the loan over an agreed term. Once fully repaid, the lender’s security interest is released.
Who can use a chattel mortgage?
Chattel mortgages are commonly used by sole traders, partnerships and companies purchasing vehicles or equipment for business purposes. Eligibility depends on the lender’s requirements, the borrower’s financial circumstances and the intended use of the asset.
Can I include a balloon payment?
Yes, some lenders offer a balloon payment, which is a larger final amount payable at the end of the loan. This reduces regular repayments but can increase the total interest paid.
Are there tax benefits?
Depending on business use and eligibility, GST credits, depreciation and interest deductions may be available. The tax treatment varies according to individual circumstances, so professional tax advice is recommended.
Can I repay the loan early?
Early repayment may be possible, depending on your loan agreement. Some lenders charge early termination fees or other costs, so it’s important to check the loan conditions.
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National Loans can help you explore chattel mortgage options for vehicles and equipment.