Using A Chattel Mortgage Calculator

If you need a car for business, you’re probably going to need a chattel mortgage. A chattel mortgage is a car loan designed specifically for business, and it allows you to take maximum advantage of the tax breaks available.

Why Choose a Chattel Mortgage?

The key reasons to use a chattel mortgage instead of regular car finance is that it allows you to:

  1. Claim the total GST of the vehicle back on your first BAS statement. This means you get the GST portion back in one hit, rather than over the lifetime of the car loan.

  2. Claim depreciation of the vehicle and interest for the loan against your tax. Ask your accountant more about how this works for you, and remember to mention the fuel input tax credit too.

  3. Get lower repayments with a residual value or balloon repayment at the end mean that you can keep your cash to run your business throughout the loan term.

At the end of the loan, you can:

  • pay out the balloon and keep the vehicle,
  • refinance the remainder, or
  • trade in the vehicle for a new car, which effectively pays off the remaining balance.

If your business has seasonal cash flow, we can tailor the repayments to fall due when your income comes in, making sure that you’ll easily be able to meet them as it suits you and there’s no extra strain on business.

For a rough idea of the kind of vehicle you could afford with a chattel mortgage, you can use our chattel mortgage calculator.

If you’re looking for a more detailed picture of exactly what your business could apply for, you can get a free, no obligation online quote, or call 1300 722 210 to speak to a finance professional.

How Does A Chattel Mortgage Work?

Just like with a secured car loan, you’ll take ownership of the vehicle on the day the loan settles and it’s yours to use.

To give you access to a lower interest rate, the lender will register a security over the vehicle, just like the mortgage on a house. Once the loan is fully repaid this security is removed from the register.

How To Use a Chattel Mortgage Calculator

A chattel mortgage calculator is an easy and fast way to get an idea of how much you could afford to spend on a vehicle. All you have to do is enter the loan amount - this is the price of the vehicle that you want to buy; whether you’re buying a new or used vehicle, and the length of the loan term that you’d prefer.

If you already have a chattel mortgage, then just enter the amounts are stated in your loan agreement.

If you’re looking to get a chattel mortgage for your business and want to find out the effect it’s going to have on your cash flow, try to find out the price of the vehicle you expect to buy, and you can estimate the loan term.

Amount = Purchase price - deposit - balloon payment

If you have a balloon or residual value payment at the end of the loan, or you have a deposit, you only need to enter the actual amount that you need to borrow. This means you’ll take the price of the vehicle, and subtract your deposit or balloon repayment to find the loan amount.

Loan Term: how long you’ll have to make regular payments before your car loan is paid off

Interest rate: the amount the lender charges you for borrowing the purchase price of your new car

Amount: the purchase price of the car, or the amount that you want to borrow if you have a deposit and/or intend to make a balloon payment at the conclusion of the loan.

Balloon payment: A lump sum that falls due at the conclusion of your car loan. It’s also know as a residual value payment, and is usually used so you get a lower interest rate while keeping cash in your business for the duration of the loan term.

While the calculator is really convenient because you get an instant result, remember that it does just give you a rough ballpark figure.

Example: an electrician uses the Chattel Mortgage Calculator to buy a new van

Reagan is an electrician and he needs to upgrade his van. He’s picked out a second hand 2010 Volkswagon Transporter that’s already setup for his trade, going for $25, 980.

He wants a loan for 3 years, and he’ll borrow the full amount, allowing him to us the cash he has saved for registration and insurance. Using the calculator, Reagan discovers that his repayments will be around $179-201 per month.

Now Reagan knows what he can expect, he can decide whether to speak to a car loan broker for an accurate assessment based on his exact business information.

To get an accurate quote for you and your business, it’s best to talk to a finance professional by calling 1300 722 210.

There’s no obligation for their advice, and they’ll be able to perform a full assessment based on the lender’s you’re best matched with.

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