What is a chattel mortgage?
A chattel mortgage is similar to a secured car loan only for assets that are purchased primarily for business use.
A chattel mortgage involves a finance company lending you the money to purchase a vehicle that will be primarily used for business purposes. Set repayments are then made on a monthly basis.
You’ll own the vehicle outright, however, the finance company will place a “mortgage” over the vehicle, as security against the loan.
Once the loan and any Residual Value (the final balance on the vehicle) has been repaid, the finance company will remove the mortgage. Alternatively, you can choose to re-finance the Residual Value or trade the vehicle in.
How does a chattel mortgage work?
Much like a secured car loan, the lender will provide the funds for you to purchase the vehicle and you’ll take ownership at the time of purchase. The lender takes a ‘mortgage’ over the vehicle as security for the loan.
Once the contract is completed you’ll own the vehicle outright.
What else should i know about chattel mortgage?
A tax deduction may be available when the vehicle is used for business purposes*
A customer who is registered for GST may claim the GST contained in the vehicle price as an input credit on their next Business Activity Statement (BAS)*
What's the Yellow Line?
Both businesses and individuals are eligible for a chattel mortgage, as long as the car is being used predominantly for business purposes.
A chattel mortgage is a good choice for those who are registered for GST on a cash accounting basis, as you should be able to claim the GST from the vehicle’s purchase price as an Input Tax Credit on your next Business Activity Statement.
Behind buying a new home, a new car is likely to be the next largest financial decision you will make. There are a vast range of products and banks are extremely competitive. It is best to seek professional financial advise to ensure you obtain the most appropriate home loan product for your needs.
Yellow loans has a vast range of lenders with a range of products to achieve the best results on obtaining the best car loan deals for you. You can contact us here and we can get your future looking bright.
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