Business Use Car Finance: What Is A Chattel Mortgage

The term “chattel” is a legal term that essentially means a “personal possession” or some form of property.
Chattels aren’t just cars, but can be boats, machinery, and real estate too, such as homes or mobile homes. The chattel holds significant monetary value and it itself becomes the ‘security’ for a lender.

Next up, we have the term mortgage. This is the Lender putting a public lien, or an interest, against the chattel. This means the chattel cannot just be sold to someone else – because it’s not the borrower’s possession to sell. And if they must, the lender can reclaim the chattel back from the borrower.
So essentially a chattel mortgage is the bank giving you possession and use of the chattel, but they have rights to it so long as the loan is outstanding.

Chattel Mortgages in Australia

Chattel Mortgages are a very popular car and equipment finance structure in Australia. It is by far our most common loan type for business users.
This is because they attract lower interest rates and it’s a relatively simple car loan that gives business users a range of tax benefits. Chattel Mortgage clients are typically allowed to claim the business use portion of the car’s finance repayments, GST, and running costs.

How is a Chattel Mortgage different from other loans?

A chattel mortgage has the following key differences:

1. They’re typically used for business purchases; and,
2. The interest rates are much lower than consumer and personal loans; and,
3.The products can be quite flexible depending on your situation; and,
4.The interest and principle of the finance repayments may be considered a tax deduction.

Whether you’re an employee, or a sole trader, partnership, or a company, you can apply for a chattel mortgage car finance if the car is for majority business use. For example, a real estate agent or an electrician has to have a car (or truck or van) in order to fulfil his or her duties.

Do you qualify?

The professional team at Auto Car Loans can easily ascertain if you’re eligible for a chattel mortgage. We’ll be to ensure you have all the required documents and have chatted with your Accountant about the tax benefits you may get from this type of financing. But don’t worry, we can talk you through these first steps with an obligation free chat on 1300 301 051.


We service Chattel Mortgage in Brisbane, Chattel Mortgage in Canberra, Chattel Mortgage in Darwin, Chattel Mortgage in Perth, and Chattel Mortgage in Sydney.




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