Definition
A chattel mortgage finances the purchase of something movable, such as a ute, truck or machine, with title passing to your business at settlement and the financier recording its security interest on the PPSR. Repayments may include a balloon at the end. Ownership from day one can affect GST credits and depreciation, depending on the business's circumstances.
Chattel is an old word for movable property. This structure secures the loan over that item, and Australian businesses use it heavily for vehicles and plant.
How it works
Funds go straight to the dealer or vendor, title is in your business name, and the financier lodges a registration on the PPSR. You repay over the term, possibly with a balloon. When the loan is repaid, the security is released.
Why businesses choose it
Owning the asset from day one may allow a GST-registered business to claim GST credits on the purchase and to claim depreciation and interest, depending on its circumstances. Your accountant can confirm.
Compared with leasing
Chattel mortgages suit assets you want to own and keep. Leases suit assets you plan to replace regularly. Our chattel mortgage review covers the details. For vehicle or equipment finance, make one enquiry.
Common questions
Who owns the asset under a chattel mortgage?
Title is in your business name from day one. The financier keeps a registered interest over it until the final instalment clears.
Can I use a chattel mortgage for a used vehicle?
Yes, subject to the lender's rules on age, condition and the type of sale.
Sources and further reading
Related terms