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Features of a Chattel Mortgage

  • term of a Chattel Mortgage can range form 12 months to 60 months
  • fixed interest rate applies
  • ownership of the asset is transferred to the client at time of purchase
  • payments can be made weekly, monthly, quarterly, yearly or structured (i.e. agreed payments over different times of the year)
  • balloon payment at the end of the term can be applied to the loan to reduce monthly payments
  • client can contribute a deposit towards the purchase (either through trade in or cash) or fund 100% of the cost of the asset
  • depreciation and interest is claimed as a tax deduction at the end of the financial year on customers profit and loss statement
  • full gst on the purchase price claimed as a gst off-set on next lodged business activity statement

Benefits of a Chattel Mortgage

  • financing heavy equipment using a chattel mortgage loan product as opposed to using own funds, will preserve cash flow to maximise working capital position
  • flexible payment options allows clients to make payments suitable to their cash flow
  • fixed payments allow businesses to accurately project income and expenses going forward
  • option of a balloon payment at the end of the term reduces payments over the term of the loan
  • chattel mortgage loans for heavy vehicles can be assessed on either a full doc or low doc basis
  • as these types of loans use the equipment as security, it allows clients to free up property equity to pursue other investment opportunities
  • balloon payment can be paid out at the end of term (by way of trade in or cash payment) or refinanced (by way of new loan agreement)
  • tax deductibility at end of the financial year