Chattel Mortgage, Business Car Finance

Chattel Mortgage Loan

A chattel mortgage is a type of business car finance that comes in the form of a mortgage on the motor vehicle. It is a popular business loan in Australia for the purpose commercial car loans.

With a chattel mortgage you or your business borrows money from the lender to purchase a car. The car then has a mortgage put against until which time as the finance is paid out. If you fail to repay, the lender can sell the vehicle to recover the debt. It is different from hire purchase in that the borrower has legal ownership of the vehicle on purchase until the car loan is repaid.

Some advantages :

• No deposit car finance available. No outlay has to be put towards the car, subject to the lenders approval, keeping cash in your business for working capital.
• You have ownership of the motor vehicle.
• Chattel mortgages generally come with the option of a balloon payment.
• The depreciation of the vehicle and the interest payments can be tax deductible.
• Where GST is claimable you can claim back all the GST on the car purchase.

GST Tax Clams

A chattel mortgage is regarded as a cash transaction. Businesses that use a cash or accrual basis for accounting for GST can claim the full Input Tax Credit for the GST contained in the price of the vehicle in your next BAS statement providing the seller is paying GST. This is under Australian Taxation.

Tax Accountants

We do recommend you talk to your accountant in regard to this. Tax laws do require that the car is predominately for business use to claim these tax benefits.

Don't have an Accountant? Our recommended Tax Accountants.

Different states of Australia charge stamp duty in the finance though this is very minimal., Most business find a chattel mortgage the best type of business car finance around. It can be more popular then a commercial hire purchase which the vehicle does not belong to you until the car loan is paid in full.

Flexible Commercial Car Loans

This type of commercial car loan is flexible in which structure, term and balloon suits. The debt can be fully amortised, although a balloon or residual payment at the end of the mortgage term is common to keep cash in your business. Additional principal payments are not tax deductible and may not save you interest until the loan is paid out.

Bill Of Sale, Chattel Mortgage

Chattel mortgage also referred to as a Bill of Sale, and is available to individuals as well as businesses, although the tax benefits apply only to commercial car loans where it is used predominately for business use. You will generally be given the options of making the repayments either in advance or arrears, with any taxes and fees either included in the finance or paid up front.

Need to know repayments and car loans interest rates?

Use our Car Finance Calculator.

Chattel Mortgage Approvals

Applying for a chattel mortgage is easy, and we makes it even easier for you. We do most of the work for you, including helping with the paperwork. As your car finance broker we make sure that there are no unexpected fees or charges that you are not aware of, and make sure that you get the best deal available.

Get approved today for a chattel mortgage. Apply online

Or call Finance Ezi, our recommended car finance broker on 1300 003 003