What is a Chattel Mortgage?

Asset Finance

A chattel mortgage is a loan for a commercial movable item. The movable property, also known as chattel guarantees, secures the loan. If you take out a chattel mortgage, you can take ownership of the chattel at the time of purchase. A chattel mortgage is commonly used for items such as motor vehicles, trucks, earthmoving and heavy equipment.

How does a Chattel Mortgage work?

A chattel mortgage allows the financier to place a mortgage over the asset so that it has peace of mind that the loan will be paid back. The business takes ownership of the asset from the date of purchase.   

Who can take out a Chattel Mortgage?

A chattel mortgage is available for the purchase of assets that will be used predominantly for business, not personal use. Therefore a chattel mortgage is suitable for companies, trusts, sole traders, ABN holders and partnerships. 

Features of a Chattel Mortgage

The following are standard features of most chattel mortgages.
  • Business takes ownership of asset upon purchase

  • Asset is listed on the company’s balance sheet

  • Loan is paid back in set regular instalments

  • 100% of the purchase price can be financed

  • A balloon or residual payment may be due at the end of the loan term


Benefits of a Chattel Mortgage

Some businesses feel the benefits of a chattel mortgage far outweigh other available loan types available to businesses.

  • Security of asset allows for a lower interest rate

  • Interest rate and repayments fixed, so you know your ongoing costs

  • Low establishment costs

  • Insurance premiums and servicing costs can be included in loan

  • GST on asset purchase may be claimed immediately

  • Length of loan may be negotiated for some assets

  • Less impact on cash flow because no deposit is required

  • Balloon repayment reduces the value of regular instalments

  • Proof of income is not required like it is for personal loans


There is a range of loan options available for business vehicles, boats, cranes, tractors, trucks, trailers, farming, mining and earthmoving equipment. The right type of loan can free up capital and assist in expanding your business in the future. To find the ideal loan type for you, tell us a little about your business, the asset you are looking to purchase and your loan requirements.

We have access to a large panel of lenders Australia wide so we can find you the right loan type and lender.

Request Quote Today! or Call us on: 08 9322 1229
Category: Asset Finance

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