8 questions you should ask before getting a chattel mortgage?

8 questions you should ask before getting a chattel mortgage?

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What questions should you ask before you get a chattel mortgage?

Whenever you take out a mortgage or loan of any type you’ll probably have lots of questions you want to ask. The right broker will always make you feel able and confident to ask as many questions as you feel you need, and be able to give you a chattel mortgage example if you ask.

Positive Lending Solutions understand that when you’re considering a commercial finance product, you’ll want to make sure it’s absolutely the right decision for you and your business.

Our expert team of brokers not only have decades of experience and access to a wide range of lenders, they’re also quick at securing chattel mortgages and know the ins and outs of the lender systems that we work with. They're always happy to take the time to discuss questions and queries however big or small.

Understanding chattel mortgages

By now you’ll may know that a chattel mortgage is a type of commercial finance product, which is primarily designed for people who are going to be using their vehicle for business purposes at least 50% of the time.

The key terms we always like to explain to potential borrowers include:

  • Chattel: this is the security on the loan – in this case, the vehicle itself, whatever it may be.
  • Mortgage: this is what the lender will take out over the car –when the loan has been paid off in full, this will be cleared.

Questions about chattel mortgages

You may have a whole list of questions already, or you may simply want to start your research here about getting a chattel mortgage.

Here are some useful questions to consider when you’re thinking about:

1. Is a chattel mortgage the right car finance option for me?

This is an important place to start. You need to consider whether you’ll be using your vehicle for business use at least 50% of the time – if so, you can proceed to considering chattel mortgages as a car finance option.

Chattel mortgages can have tax advantages and especially suit those who are registered for GST on a cash accounting basis. If you’re not sure about your GST situation, check with your accountant before moving forwards.

If cash flow is important in your business, you may appreciate the flexible loan terms often found in chattel mortgages.

2. Will I own the vehicle straight away with a chattel mortgage?

This is something that often confuses people. With a chattel mortgage, you will take ownership of the vehicle immediately. You need to understand though that the mortgage itself will only clear when the loan is repaid in full.

3. What are the interest rates on a chattel mortgage?

As with most car finance, there are different interest rates available for different chattel mortgages – often depending on the lender themselves, your credit score and the type of vehicle you are buying.

By using the expert team of brokers at Positive Lending Solutions you’ll have the peace of mind that they’ll find or negotiate the best interest rates available for your chattel mortgage.

4. Will the interest rates stay the same throughout my chattel mortgage?

This depends on the choice you make at the beginning of your chattel mortgage – whether to choose a fixed or variable interest rate.

With a fixed rate, the interest rate will remain the same throughout the chattel mortgage regardless of whether interest rates go up or down. This allows you to know exactly what will leave your bank account each month and helps you to budget exactly. If you’ve gone for a fixed rate of interest, try setting up a direct debit for your chattel mortgage so that you never miss a repayment.

With a variable rate, the interest rate could go up or down. This means that you could either end up paying slightly more or slightly less each month. If you choose this option, you’ll need to keep an eye on your payments so you know exactly how much your chattel mortgage costs you each month.

5. Are there extra fees and charges on a chattel mortgage?

This will depend on the specific chattel mortgage, which you get but it’s something that your chattel mortgage broker will be able to make you aware of if you’re not confident going through the small print yourself.

6. Will I be charged a fee if I pay back my chattel mortgage early?

Generally, it’s quite common for there to be early repayment fees on chattel mortgage agreements. Speak to Positive Lending Solutions and let your broker know if you are intending, or would like to try, to pay back the mortgage early and they can help to find the right chattel mortgage for you.

7. How much will my monthly repayments be?

This is something that you can discuss with your chattel mortgage broker before they start to research the best chattel mortgage for you.

It’s useful for you to use the free and easy online loan calculator to figure out exactly what your repayments could and should be. You’ll be able to budget accordingly and it’s always important to be realistic and never agree to a chattel mortgage that you don’t think you’ll be able to pay back.

Make sure you find out from your chattel mortgage broker exactly how much your monthly repayments will be each month (if you have a fixed rate of interest) so that you can set up a direct debit or set a reminder for yourself to make payments on time.

8.What’s the process for getting a chattel mortgage?

We’ll work on your behalf to contact a range of lenders who we know and trust. If we need documents from you, we’ll ask you to send them over – having these organised in advance always helps to avoid unnecessary delays.

Once we get your chattel mortgage approved, we’ll make sure funds are transferred over to your bank account – then it’s over to you to go ahead and purchase your vehicle!

If you think a chattel mortgage is the right option for you, contact Positive Lending Solutions on 1300 722 210 to start the process. We’ll always try and contact you within 24 hours of your initial application.

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