What is a Chattel Mortgage?
A Chattel is defined as personal property which is movable unlike land or buildings. In answering the question What is a Chattel Mortgage, we would start by saying a Chattel Mortgage is a loan which is secured by a chattel rather than land or buildings, like in a traditional mortgage. In a business context a chattel might include a car, truck, excavator, or some other piece of plant & equipment used for business purposes.
The lender holds the “lien” in a Chattel Mortgage which gives the lender the legal right to sell the goods if the debtor defaults. The lien holder is the finance company that has provided the finance for the goods, and this lien is released at the end of the loan period when the amount is paid in full.
Business’s tend to use Chattel Mortgages to take out a loan to buy new business equipment which will help their business grow rather than taking cash from the business to buy the equipment outright. Financing their equipment ensures the business has the capital needed to grow the business.
Why Use a Chattel Mortgage?
Chattel Mortgages when used in a business may give the business tax efficiencies and depreciation benefits. Generally the business will claim the interest charges on the loan, and also claim the depreciation for the asset that has been purchased.
And for business’s that are registered for GST on a cash basis, they may also claim back the GST as an input tax credit on their next BAS. This GST tax credit is a major incentive for most business owners when deciding to finance their equipment using a Chattel Mortgage.
Chattel Mortgage Calculator
If you are a business owner and would like to calculate what your monthly repayments might be for a piece of business equipment then you can use out Chattel Mortgage Calculators. This is our Chattel Mortgage Calculator for Car Loans, this is our Truck Finance Calculator and this is our Equipment Finance Calculator which is located on our sister website Equipfunding.com.au.
If you would like to contact us to discuss the benefits of a Chattel Mortgage for your business or any other equipment finance related enquiry, you can either Call us, Email us, complete a Quick Enquiry Form, or Apply for a Chattel Mortgage using our Quick 5 Minute Online Application.