Key highlights
- A chattel mortgage is a type of business car loan
- Structured for a vehicle used predominantly for business
- Business owns the car; lender holds security until repaid
- One broker compares suitable options across 80+ lenders
When financing a business car you will often see the terms car loan and chattel mortgage used side by side. They overlap, but they are not identical, and the distinction can matter. Here is how the two compare.
How do a car loan and chattel mortgage relate?
A chattel mortgage is itself a type of business car loan, one specifically structured for a business buying a vehicle used predominantly for business purposes. When people contrast a general car loan with a chattel mortgage, they are usually comparing a more consumer-style loan against a business finance product. The key differences lie in ownership, security and how each is treated for a business.
How does chattel mortgage ownership work?
Under a chattel mortgage, the business owns the car from the outset and the lender holds security until repayment. This business-oriented structure can carry GST and depreciation implications that differ from a personal-style car loan. Those implications depend on your circumstances and how the vehicle is used, so they should be confirmed with your accountant or registered tax adviser rather than assumed to be the same across products.
Should you choose a car loan or chattel mortgage?
For a genuine business vehicle, a chattel mortgage is frequently the more suitable route because it is designed for that purpose. A more general car loan might be considered where business use is limited or the applicant does not qualify for business finance. The right answer depends on how the car will be used, your business structure and your overall financial picture.
How do you choose the right structure?
Overdrive Business Vehicle Finance can explain the differences for your situation and compare suitable options across a panel of more than 80 lenders through one broker, Simon Kendrick. Ask for an obligation-free quote. The initial check is a soft enquiry that does not affect your credit score, with no obligation to proceed.
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