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What is a chattel mortgage?

A chattel mortgage is a business finance product where the customer takes ownership of the motor vehicle at the time of purchase.

How does a chattel mortgage work?

Under a chattel mortgage the finance provider funds the purchase of the vehicle. The customer takes ownership of the motor vehicle at the time of purchase.

The financier then takes a mortgage over the vehicle as security for the car loan.

Once the contract is completed, the mortgage is removed giving the customer clear title to the motor vehicle.

Balloons and terms

The chattel mortgage balloon is the amount that will need to be paid to the finance provider at the end of a chattel mortgage. Having a balloon put into your agreement makes the monthly lease payments cheaper and much more affordable. The decision of having a balloon or not is entirely up to you, you may choose to pay the motor vehicle down to zero which means once the final lease payment is made, you own the motor vehicle.

Standard balloon structures

Click here for a detailed summary of all residual values and balloon structures. Car Lease Residuals

What are the benefits of a chattel mortgage?

• Chattel mortgage terms range from 12 to 60 months
• A tax deduction is available if used for business use
• The Interest Rate is fixed for the term of the chattel mortgage agreement
• Chattel mortgage repayments are fixed for the term
• Lower interest rates due to the vehicle lease being secured against the vehicle
• No GST is charged on the monthly chattel mortgage payment
• Customers registered for GST can claim the GST that is included in the vehicle purchase price
• We can have you in your new car within 24-48 hours
• You will receive great hands on personalised service from an experienced car leasing consultant
• Subject to credit approval, we will finance 100% of the purchase price
• A balloon payment will lower your regular monthly payments. This not only improves your cash flow, but makes your motor vehicle more affordable

Who should consider a chattel mortgage?

A chattel mortgage is suitable when you use your vehicle wholly or predominantly for business purposes. This means that the vehicle is used for business for more than 50% of the time. It's also a great option if you would like to own the motor vehicle at lease end.

What are the tax implications of a chattel mortgage?

The monthly repayment or balloon amount is not subject to GST.

Where the vehicle is used for business use, the hirer can claim "interest and depreciation". That is interest on the lease payments and depreciation up to the luxury car tax threshold or depreciation limit of $57,180

GST is also claimable on the purchase price of the vehicle in one lump amount.

Are there any other options?

If you are thinking about doing a chattel mortgage, you may also want to consider a Finance Lease, Commercial Hire Purchase or Novated Lease as other car leasing options.

Need Further Information?

Either complete our friendly enquiry form and we will call you shortly or call the number 1300 Car Lease (1300 227 532) and talk to an experienced car leasing consultant today.

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