Chattel Mortgage

Chattel Mortgage/ Commercial Loan

What is a Chattel Mortgage?

Now days probably the most common form of asset and equipment finance (for self employed & businesses), a chattel mortgage is essentially a mortgage over goods to be financed.

Chattel mortgage is classed as a cash sale which means the goods automatically become your property on purchase, the finance company takes a mortgage over the purchased assets.

Tax & GST

Under a chattel mortgage a client can claim depreciation, running costs and the portion of the finance interest attributable to business use. The chattel mortgage allows businesses to claim the full input tax credit from GST incurred expenses immediately (next BAS statement). GST is charged on the purchase price of the asset but not on the monthly repayment or residual/ balloon payment.

Cost of Finance

Generally Chattels can be the most competitive when it comes to interest rates against the finance. 

It is important to always compare total costs of a loan rather than just the interest rate. Additional fees and charges can make a cheap interest rate much more expensive than it sounds.