The Ultimate Guide to a Chattel Mortgage
Your guide to a chattel mortgage
For many Australian businesses, chattel mortgages are a great way to finance cars. There are various tax benefits* that you may be able to enjoy if you decide to get a chattel mortgage and they’re popular with both businesses and individuals using their car for business purposes.
Finding the right car finance option for you can be a slightly daunting task, especially if you’re a business owner with a long list of things to do and people to manage.
Speak to us today to find out how we can help you to find out if a chattel mortgage is right for you.
What is a chattel mortgage?
A chattel mortgage is a commercial finance product. It’s designed for people who are using their vehicle for business purposes at least 50 per cent of the time.
The chattel relates to the vehicle itself, so the car that you are purchasing can be seen as the chattel. The lender takes out a ‘mortgage’ on the car, which will stay until the loan is paid off in full.
With a chattel mortgage, the borrower will take ownership of the vehicle immediately, but the mortgage will only clear when the loan is fully repaid.
How a chattel mortgage works
If you decide to get a chattel mortgage, the lender will lend you the money to buy a car – which you’ll own immediately. The lender will take out a ‘mortgage’ over the car (which is the ‘chattel’) and this will continue until the loan is repaid.
When the loan is repaid, the chattel mortgage will end. You will also need to pay any balloon payment.
Who does a chattel mortgage suit?
To qualify for a chattel mortgage, you’ll need to be planning to use your vehicle for business purposes at least 50 per cent of the time.
This type of car loan is ideal for those who are registered for GST on a cash accounting basis. If you’re not sure whether this is relevant to you, check with your accountant who will be able to help.
Chattel mortgages often have flexible loan terms, meaning that you can find the right option for you. Keep cash flow running in your business by finding a chattel mortgage that works for you.
If you are a business owner wanting a low cost and flexible car finance option, speak to us about chattel mortgages today.
Where can you get a chattel mortgage?
There are many lenders offering chattel mortgages in Australia today. It’s easy to go online and search you thousands of options – but it’s also time-consuming and often overwhelming.
Asking for expert help will save you time, money and a huge amount of stress. We have decades of experience working with people and businesses looking for the right car loan option for them. We can quickly assess your situation and direct you to whether a chattel mortgage is the right choice for you.
Having access to a wide range of lenders means that we’ll also be able to find you a chattel mortgage with the best interest rates and the lowest fees. This will give you the peace of mind that you’ve got a chattel mortgage that is cost-effective and won’t build up extra costs in the long-term.
What’s the process of getting a chattel mortgage?
When you start the process of getting a chattel mortgage, it’s always useful to know where you stand and how lenders will view your potential borrowing power. By using our simple and car loan calculator, you could get an instant idea of how much you can borrow – setting your search off in the right direction.
Next, you’ll need to make sure that you’ll be purchasing a vehicle that will be used for business purposes 50 per cent of the time or more. Chattel mortgages are designed for use with business vehicles and it’s really important that you figure out exactly what your usage will be before committing to the loan.
Speak to your accountant if you’re unsure about your current set up with GST and taxes. They’ll be able to advise you whether a chattel mortgage will be beneficial to your tax returns – potentially helping you to save money in tax deductions long-term.
Once you’ve decided that a chattel mortgage is right for you, speak to us to start the car loan process. We know that speed is important and will always aim to make contact with you within 24 hours of your initial application.
We’ll search our wide range of lenders to find the right option for you – asking you to provide the required documents as we move through the process. Make sure you have these ready to avoid any unnecessary delays.
Once your chattel mortgage has been approved, you’ll have funds transferred to your bank account and can go ahead with the purchase of your vehicle.
Interest rates on a chattel mortgage
Just as chattel mortgages offer flexible loan terms, there are also different interest rates available for different loans. You may be able to get an idea of the interest rate that you’ll expect to pay on your chattel mortgage by entering your information into our using our quick quote form.
Ensure that you’re getting the best interest rate by letting Positive Lending Solutions take care of your chattel mortgage. With decades of experience and access to a wide range of lenders, we know what the right interest rates are for finding a chattel mortgage today.
What should you ask your broker about your chattel mortgage?
Before you agree to a chattel mortgage, it’s important to know as much as possible so that you can budget properly and always make sure that your repayments are made on time and in full.
Here’s a list of some of the questions you may want to ask your broker about your chattel mortgage:
- What are the fees and charges on the chattel mortgage?
- Are there penalty fees for early repayment?
- What will my monthly repayments be?
How can you compare lenders for chattel mortgages?
Without expert knowledge and bags of time, it’s often tricky to compare lenders for chattel mortgages – especially if you’re doing this for the first time.
Asking for help can save you time, money and stress. Let Positive Lending Solutions compare lenders for you. Our brokers know how to get the best interest rates and fees on chattel mortgages and they may well have access to deals that you can’t get online.
If you want to do your research beforehand to get an idea of the offerings from different lenders, this can offer reassurance and a rough understanding of the market.
What are the key terms you need to understand with chattel mortgages?
We are always happy to explain the key terms involved with different types of loans and to explain how they work and whether they may be the right option for you.
Here are a few terms that may be useful to understand if you’re getting a chattel mortgage:
- Chattel: this is the security on the loan – in this case, the car itself.
- Mortgage: this is what the lender takes out over the car – it will clear when the loan has been paid off in full.
- Business purposes: to qualify as using your car for business purposes, the vehicle should be used for business at least 50% of its total usage.
- Tax deductible: you can claim costs against your business income when it comes to tax time.
- GST: Goods and Services Tax – this is 10% in Australia.
Getting a Chattel Mortgage
If you think getting a chattel mortgage could be the right option for you, get in touch with Positive Lending Solutions to start the loan process.
We aim to make the car loan process as easy and efficient as possible protecting your time and saving you money and unnecessary stress wherever possible.
* Disclaimer: Please consult your accountant for eligibility on tax benefits, claiming GST on BAS and 100% finance.
Positive Lending Solutions or the Positive Group is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances.
Positive Lending Solutions or the Positive Group is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.