Key highlights
- The car is the chattel; the lender takes security
- Your business owns the vehicle from settlement
- Business carries maintenance and insurance responsibility
- One broker compares chattel mortgage options across 80+ lenders
The chattel mortgage is one of the most common ways Australian businesses finance a car, yet the name can be off-putting. Underneath it is a straightforward arrangement. Here is what a chattel mortgage is and how it works for a business vehicle.
What is a chattel mortgage for a car?
In a chattel mortgage, the chattel is the car and the mortgage is the security the lender takes over it. The business owns the vehicle from the moment of purchase, while the lender registers an interest in it until the loan is fully repaid. Once the final payment is made, that security is released and the business holds the car outright, free of any lender claim.
Why do businesses choose a chattel mortgage?
The structure is popular for business cars because ownership sits with the business from day one, which can suit how many businesses prefer to hold their assets. Repayments are commonly fixed, making budgeting predictable, and a balloon payment can be used to lower monthly repayments if that helps cash flow. The specific GST and depreciation treatment depends on your circumstances and is best confirmed with your accountant or registered tax adviser.
What should you weigh with a chattel mortgage?
Because the business owns the vehicle, it also carries responsibility for it, including maintenance and insurance. A chattel mortgage suits vehicles used predominantly for business purposes. If a large balloon is used, remember that a substantial amount falls due at the end of the term, to be settled or refinanced. Understanding these features upfront helps you decide whether the structure fits your plans.
Does a chattel mortgage suit your business?
Overdrive Business Vehicle Finance can compare chattel mortgage options across a panel of more than 80 lenders through one broker, Simon Kendrick, and explain how the numbers look for your situation. Request an obligation-free quote. The first check is a soft enquiry with no impact on your credit score and no obligation to proceed.
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