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 do I need to know?
- 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)*
- Improve your cash flow
* Please refer to your accountant for eligibility.
Common questions about chattel mortgages
What are the benefits?
- Flexible loan repayment periods, ranging from one to seven years
- You may have the option to reduce the monthly repayments by setting a final balance (residual value or balloon) payment between 0 and 50 per cent. This may depend on the type and age of the vehicle.
- The potential to claim tax deductions if the car is being used for business purposes*
- The potential to claim Input Tax Credits if you are registered for GST*
A chattel mortgage taken out with Stratton Finance also has these additional benefits (subject to lender selection):
- Fixed interest rate and monthly repayments for the duration of the loan
- Repayments can be aligned with your or your business' cash flow
*Please check with your accountant for eligibility
Who would it suit?
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.
What tax and GST can I expect to pay?
If the car is being used for business purposes, you may be able to claim a tax deduction on the loan interest charges, as well as on the depreciation value of the vehicle, up to the Depreciation Limit set by the Australian Tax Office. Speak to your accountant to find out more.
What is a chattel mortgage and how does it work?
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.
Looking for more information?
We've made it easy for you to find everything you need here.
EXCEPTIONAL, as good as Customer Service gets
Can't Recommend Highly Enough!!
Meet our network partners
As part of the carsales network, we have an exclusive panel of specialist lenders and industry partners that will protect and treat you right every step of the way.
Ready to get started?
Get an instant quote or apply now online.