Key highlights
- Three common structures, each handling ownership differently
- Chattel mortgage: you own the vehicle from the outset
- Finance lease: the lender owns, you use and pay
- One broker explains the options and compares 80+ lenders
Business vehicle finance comes in several structures, and the names can be confusing. Chattel mortgage, finance lease and hire purchase each handle ownership and accounting differently. Here is a plain-English comparison.
What is a chattel mortgage?
With a chattel mortgage, your business takes ownership of the vehicle from the outset while the lender holds security over it until the loan is repaid. It is a widely used structure for ABN holders and can align with certain accounting approaches, which your accountant or registered tax adviser can confirm.
What is a finance lease?
Under a finance lease, the lender owns the vehicle and leases it to your business for regular payments over the term. You have use of the vehicle without owning it during the lease, and arrangements at the end vary by contract and lender.
What is hire purchase?
Hire purchase sits between the two. The lender retains ownership while you pay it off, and ownership transfers to your business once the final payment is made. Each structure carries different tax and GST implications, so professional advice matters.
Which finance structure should you choose?
Unsure which structure fits your business? Simon at Overdrive can explain the options and compare 80+ lenders. Request an obligation-free quote. It is a soft check that will not affect your credit score.
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