Chattel mortgage

Find out more about tax effective and structured chattel mortgage options for your vehicle and equipment.

Flexible chattel mortgage to suite your needs

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Compare chattel mortgages with Savvy

Compare Australia’s top commercial lenders with Savvy. At savvy we partner with all major banks, non-banks and independent financiers. We have access to low rates with flexible terms. Loan terms between 1-7 years with residuals available. Our experienced consultants understand the commercial space and will guide you through the process to deliver a great result.  
 

What is a chattel mortgage?

A chattel mortgage is one of the most popular commercial facility arrangements being used by sole traders, partnerships and companies to finance their cars and equipment. Under a chattel mortgage you are the registered owner of the vehicle unlike a car lease. This allows you to claim back all the GST on your next BAS if registered and includes other tax benefits like interest deductions.  

Why trust savvy with your chattel mortgage

We compare Australia’s top lenders which provides substantial savings.

What does the Savvy process look like?

Compare finance, apply, get advice, and enjoy the benefits of a chattel mortgage with Savvy

Your chattel mortgage questions answered

Need fast answers? Get to the bottom of the basics about the features and benefits of chattel mortgage finance.

Who is eligible for a chattel mortgage?

To apply for a chattel mortgage, you must be a registered Australian business (an ABN holder) intending to use the vehicle for over 50% business use.

How does ownership of chattel mortgage work?

When a business takes out chattel mortgage, they take ownership of the vehicle (it becomes an asset on the balance sheet.) The financier ties the loan to the value of the vehicle. You pay off the loan in instalments until the mortgage is removed. A business can claim GST, depreciation and interest back on their BAS as a chattel mortgage is a business loan. Business can also structure chattel mortgages with residual value payments (balloon payments) and over 100% finance.

Can I buy used vehicles or equipment with a chattel mortgage?

Fixed-interest chattel mortgage can be used to buy used assets and business vehicles. That means, when the equipment or vehicle you need isn’t brand-new, you can still reap the benefits of a tax-friendly, customisable chattel mortgage agreement.

What is a balloon payment?

Also known as a residual payment, you can use a balloon amount to adjust your monthly repayments by lowering the proportion of finance you pay off during the set term. Many Aussie business owners choose to limit a residual to the predicted value of the vehicle when their chattel mortgage ends.

Can I use my existing vehicle as a trade-in?

You can borrow 100% of the value of a vehicle or equipment with a chattel mortgage – or choose to use a deposit. That can take the form of cash or a trade-in. Chattel mortgages are designed for business users and give you the freedom to borrow what you need and apply your way.

How do I repay my chattel mortgage?

Chattel mortgage repayment terms run between one and seven years, and you get flexibility as standard. You can tailor things further by adding a residual – which lowers the amount you’ll repay during your agreement. You can even account for seasonal trade by arranging to pay off more during busy periods. Payments are usually monthly and come through a direct debit.

How do I deal with a residual amount?

When your chattel mortgage ends, you can pay off your residual in one of three ways. Trade the vehicle or asset in which pays off the residual and get you started with a new chattel mortgage. Refinance and continue to use the car for a while longer or simply pay out the residual with cash.

Do I need to factor in business usage when calculating tax deductions?

Yes, a chattel mortgage is designed for business, and the tax benefits reflect that. However, it’s important to remember that any tax you claim needs to correspond with the amount of business use your asset or vehicle gets. If you use a car for your business activities only 75% of the time, you’ll need to account for that accordingly. When it comes to claiming for both the interest portion of repayments and any depreciation during your agreement, be careful to only include any usage the ATO allows.

What is a low doc chattel mortgage?

A low doc chattel mortgage allows you to get approved for finance when you don’t have the standard required 2 years worth of finance statements. Lenders in this instance will request alternative documents such as bank statements, BAS statements and potentially other documents.  

 

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