A chattel mortgage is Australia's most popular business vehicle and equipment finance structure. You own the asset from settlement, claim the full GST upfront, and deduct interest plus depreciation at tax time.
*Indicative. Varies by credit profile and lender.
The word "chattel" is an old legal term for movable property. In a chattel mortgage, the lender takes a "mortgage" over that movable asset as security for the loan.
Your business purchases the vehicle or equipment. You take ownership at settlement, and the lender registers a charge over it via PPSR.
You repay principal + interest over 2–7 years. You can set a balloon (residual) to lower monthly repayments.
Once fully repaid, the lender removes the PPSR charge. You own the asset outright with no further obligations.
Understanding the differences helps you choose the right structure for your tax position and cash flow.
| Feature | Chattel Mortgage | Finance Lease | Operating Lease |
|---|---|---|---|
| Asset ownership | Borrower | Lender | Lender |
| GST claim timing | Upfront (BAS) | Per payment | Per payment |
| Tax deduction | Interest + depreciation | Full lease payment | Full lease payment |
| Balance sheet | On balance sheet | On balance sheet | Off balance sheet |
| Balloon/Residual | Optional (0–40%) | Required | Built-in residual |
| End of term | Own outright | Own or return | Return asset |
Disclaimer: Tax outcomes depend on your individual circumstances. Always consult a qualified accountant or tax adviser before making finance decisions. This information is general in nature only.
A chattel mortgage is a business finance product. A standard car loan is typically a consumer product. Key differences: chattel mortgages allow GST claims and tax deductions, require ABN/business use, and are regulated under the NCCP Act exemptions for business use. Consumer car loans are regulated under the full NCCP Act.
Yes — specialist lenders assess applications on a case-by-case basis. Factors like asset type, business trading history, and deposit amount can offset a lower credit score. Some non-bank lenders specifically cater to borrowers with impaired credit.
A balloon (or residual) is a lump sum due at the end of the loan term. Setting a balloon lowers your monthly repayments but means a larger amount is owed at the end. You can refinance, sell the asset to cover it, or pay it in full. Balloons are typically 0–40% of the original purchase price.
Yes. Most lenders allow early repayment, but some charge an early termination fee (typically 1–2 months interest). Check the fee schedule in your loan contract before agreeing to a lender.
Most lenders will finance 80–100% of the asset's purchase price. The maximum loan amount depends on your business financials, credit history, and the asset type. Some lenders will finance up to $500K on a low-doc basis for strong trading businesses.
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