Chattel mortgage is a finance loan where you take ownership of the business equipment, car, truck or other vehicle at the time of purchase. It’s sometimes called an equipment loan, national commercial loan or commercial loan.
How do they work?
We give you the money up front to buy the equipment or vehicle. You own it immediately. As security, we take out a mortgage over the equipment with the ASIC. This means that if the loan isn’t paid we can sell the equipment to recover our money.
When your contract term ends and you’ve paid the loan in full, the mortgage title is yours.
What equipment do chattel mortgages best suit?
It’s ideal for acquiring equipment that moves and large assets that have a service life of several years or more. For example:
- Cars, trucks and commercial vehicles
- Computers and IT systems
- Cranes and construction equipment
Who do chattel mortgages best suit?
Smaller businesses under the simplified tax system (STS) that have a turnover of less than $2 million.
What are the benefits of chattel mortgages?
- Lower interest rates – as the equipment is secured by mortgage
- Deposit option – if it suits, you can get underway with a big payment at the start of your contract
- Balloon payment on residual – you can make a large final payment at the end
- Short or long term contracts – from 1 to 5 years
- Easy budgeting – your repayments and interest rates are fixed so you always know what you’re up for
- Tax advantages – deductions for depreciation of the asset and interest paid
- Claim 100% of GST – as a credit on your BAS statement