Chattel Mortgage
The most popular business vehicle finance option for GST-registered businesses. Own your vehicle from day one, claim the full GST upfront, and deduct interest and depreciation as business expenses.
Immediate ownership. Upfront GST credits. Tax-deductible interest.
What is a Chattel Mortgage?
A chattel mortgage is a type of business loan specifically designed for purchasing vehicles and equipment. The term "chattel" refers to moveable personal property - in this case, your vehicle. The vehicle acts as security for the loan, with the lender registering a mortgage against it until the debt is repaid.
Unlike a car lease where the finance company owns the vehicle, with a chattel mortgage you own the vehicle from day one. This immediate ownership is what allows you to claim the full GST credit upfront and depreciate the asset on your books.
Chattel mortgages are exclusively for business use. You'll need an ABN to apply, and to maximise the tax benefits, you should be registered for GST.
How a Chattel Mortgage Works
The process is straightforward - here's what happens
Apply for Finance
Tell us about your business, the vehicle you want, and how much you need to borrow. We'll check your options with 40+ lenders.
Get Approved
Once approved, the lender provides funds to purchase the vehicle. You become the legal owner immediately.
Claim Your GST
As the owner, you can claim the full GST credit on the vehicle purchase in your next BAS. That's immediate cash back.
Make Repayments
Pay fixed monthly repayments over your loan term. Interest and depreciation are tax-deductible business expenses.
Checking your options won't affect your credit score
Chattel Mortgage Tax Benefits
For GST-registered businesses, a chattel mortgage offers significant tax advantages
Claim GST Upfront
Claim the full GST on the vehicle purchase price in your next BAS. For a $55,000 vehicle, that's $5,000 back in your pocket immediately.
Example: $55,000 vehicle (inc GST)
GST credit claimed: $5,000
Depreciation Deductions
As the owner, you can depreciate the vehicle on your books and claim it as a tax deduction. The instant asset write-off may also apply.
Note: Check current thresholds and eligibility with your accountant for instant asset write-off.
Interest is Tax-Deductible
The interest component of your chattel mortgage repayments is a tax-deductible business expense, reducing your taxable income.
Tip: Keep records of your repayment schedule showing interest vs principal for tax time.
Important: Tax benefits depend on your individual circumstances. Always consult with your accountant or tax advisor for advice specific to your business.
Who is a Chattel Mortgage Best For?
Chattel Mortgage is Ideal For
Consider Other Options If
Chattel Mortgage vs Other Options
See how chattel mortgage compares to other business vehicle finance structures
| Feature | Chattel Mortgage | Finance Lease | Hire Purchase |
|---|---|---|---|
| Vehicle Ownership | You own from day 1 | Lender owns during term | Lender owns until final payment |
| GST Claim | Full amount upfront | Claimed over term | Claimed over term |
| Depreciation Claim | Yes - full depreciation | No (not your asset) | Yes - after ownership transfers |
| Interest Deductible | Yes | N/A (lease payments deductible) | Yes |
| On Balance Sheet | Yes (asset & liability) | Can be off-balance sheet | Yes (asset & liability) |
| Balloon Payment | Optional | Residual common | Optional |
Not sure which option is right for you? Talk to our team and we'll help you decide based on your business needs.
Understanding Balloon Payments
A balloon payment (or residual value) is an optional lump sum payment at the end of your chattel mortgage term. Setting a balloon reduces your monthly repayments during the loan, but means a larger final payment.
Without Balloon
Higher monthly repayments, nothing to pay at the end
$50,000 loan @ 7% over 5 years
~$990/month
Final payment: $0
With 30% Balloon
Lower monthly repayments, $15,000 to pay at end
$50,000 loan @ 7% over 5 years
~$781/month
Final payment: $15,000
At the end of the term, you can:
- Pay the balloon and own the vehicle outright
- Refinance the balloon over a new term
- Trade in the vehicle and use the equity toward your next one
Note: Example figures are indicative only. Actual repayments depend on interest rate, fees, and loan terms.
Chattel Mortgage Requirements
General Requirements
Flexible Options Available
We work with specialist lenders who consider:
Chattel Mortgage FAQs
Common questions about chattel mortgages for business vehicles
A chattel mortgage is a type of business loan where the vehicle (the "chattel") is used as security for the loan. Unlike a car lease where the lender owns the vehicle, with a chattel mortgage you own the vehicle from day one. The lender registers a mortgage against the vehicle until the loan is fully repaid.
Chattel mortgages are available to businesses with an ABN, i...
Chattel mortgages are available to businesses with an ABN, including sole traders, partnerships, companies, and trusts. To maximise the tax benefits (particularly GST credits), you should be GST registered. Some lenders also offer chattel mortgages to ABN holders who aren't GST registered, though the benefits are reduced.
Chattel mortgages offer significant tax benefits for GST-reg...
Chattel mortgages offer significant tax benefits for GST-registered businesses: 1) Claim the full GST on the purchase price upfront on your next BAS, 2) Claim depreciation on the vehicle as a tax deduction, 3) Claim the interest portion of your repayments as a business expense. These benefits can significantly reduce the effective cost of the vehicle.
When you purchase a vehicle using a chattel mortgage, you ca...
When you purchase a vehicle using a chattel mortgage, you can claim back the GST component of the purchase price on your next Business Activity Statement (BAS). For a $55,000 vehicle (inc GST), you could claim back $5,000 in GST credits. This upfront GST benefit is one of the main advantages of a chattel mortgage for GST-registered businesses.
A balloon payment (also called a residual) is an optional lu...
A balloon payment (also called a residual) is an optional lump sum payment at the end of your chattel mortgage term. Setting a balloon payment (e.g., 30% of the vehicle value) reduces your monthly repayments during the loan term. At the end, you can pay the balloon, refinance it, or trade in the vehicle. Balloons are flexible and can be tailored to your cash flow needs.
The key difference is ownership. With a chattel mortgage, yo...
The key difference is ownership. With a chattel mortgage, you own the vehicle from day one and can claim GST upfront. With a car lease (finance lease), the lender owns the vehicle during the term, GST is claimed over the lease period, and you typically have options at the end to purchase, re-lease, or return. Chattel mortgages suit businesses wanting immediate ownership and upfront GST benefits.
Yes. We work with specialist lenders who focus on your busin...
Yes. We work with specialist lenders who focus on your business's current performance and ability to service the loan, rather than just your credit history. If your business has consistent cash flow and revenue, we can often find chattel mortgage options even with past credit issues.
Chattel mortgages can be used for most vehicles used for bus...
Chattel mortgages can be used for most vehicles used for business purposes, including cars, utes, vans, trucks, and commercial vehicles. The vehicle can be new or used. Most lenders have age and condition requirements for used vehicles, typically financing vehicles up to 10-15 years old.
Chattel mortgage terms typically range from 1 to 7 years, wi...
Chattel mortgage terms typically range from 1 to 7 years, with 3-5 years being most common. Longer terms mean lower monthly repayments but more interest paid overall. We can help you find the term that balances your cash flow needs with the total cost of finance.
Deposit requirements vary by lender and your financial situa...
Deposit requirements vary by lender and your financial situation. Many lenders offer no-deposit chattel mortgages for strong applications. Having a deposit (10-20%) can help secure better rates or improve approval chances if you have credit challenges. We'll find options that work for your situation.
Still have questions? Contact our friendly team
Questions About Chattel Mortgages?
Our business finance specialists can help you understand your options and find the right solution.