Immediate ownership is the core advantage—and the source of the main risks. Assess total cost, balloon exposure, asset value, evidence and conditional tax outcomes before choosing the structure.
*Subject to GST registration, creditable purpose, apportionment, asset rules and current tax law.
The borrower owns the movable asset while the lender registers security over it. That gives the business control of the asset, but also leaves it carrying depreciation, maintenance, sale-value and balloon risk.
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 | Potential acquisition credit | Generally follows taxable lease charges | Generally follows taxable lease charges |
| Tax deduction | Potential business-use interest + owner depreciation | Depends on tax characterization and business use | Depends on tax characterization and business use |
| Balance sheet | On balance sheet | On balance sheet | subject to contract-specific accounting |
| Balloon/Residual | Optional (0–40%) | Required | Built-in residual |
| End of term | Own outright | Contract-specific purchase, refinance or return options | Return or other contract-specific option |
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 documented for a business-purpose transaction, while a standard personal car loan is consumer credit. GST and deductions are not automatically “included” with the product; they depend on the taxpayer, business use, transaction and current law. Consumer-credit protections and documentation can also differ.
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.
There is no universal finance percentage or low-doc cap. The amount available depends on the asset and seller, business cash flow, existing commitments, credit profile, contribution, term, balloon, evidence and lender policy.
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Reviewed by David Blackman — Specialist Asset & Equipment Finance Broker, 20+ years banking & fleet experience. Last reviewed: 11 August 2026.
This page is general information only — not tax, legal or credit advice. Tax outcomes depend on your circumstances; confirm with your accountant and see the ATO on the instant asset write-off, the ATO on claiming GST credits and Moneysmart (ASIC).