Calculators & Tools
Chattel Mortgage Calculator Finance Interest Rates

Chattel Mortgage is a versatile financing that can be used for the purchase of a wide range of commercial assets. It is suited to all types of motor vehicles, including dual cab utes, SUVs, executive cars, luxury vehicles, trucks, and light commercial vans. All commercial equipment can be financed with a Chattel Mortgage, subject to ATO approval of the equipment as a legitimate asset.

Chattel Mortgage suits many commercial structures, including SMEs, corporations, partnerships, family enterprises, sole traders, and ABN holders. The suitability of this financing is primarily associated with the accounting method used. This form of finance is best suited to operations that use the cash accounting method.

The balloon is a portion of the loan amount that is set aside for payment at the end of the term. It can be represented as a percentage of the loan amount or as a fixed dollar amount. The balloon is due to be paid after all the monthly payments are finalised. Interest is charged on the balloon.

Yes. The interest portion of the monthly repayments can be claimed by as a tax deduction when the annual accounts are prepared by the accountant. The capital repayment portion of the monthly payments is not deductible.

The size of the balloon would be subject to lender approval. When processing the finance application, lenders would take into account many aspects of the credit profile and creditworthiness of the business in approving the finance terms and conditions requested. A larger balloon reduces the monthly payments but the loan attracts a larger amount of interest compared with a smaller balloon. A smaller balloon results in larger monthly commitments but less total interest payable.

Yes. Chattel Mortgage is a secured financing which can suit many businesses including small and micro operations. As with all finance applications, the applicant must have an ABN and identification. Lenders also request a range of financial documentation as part of the application.

The finance term for Chattel Mortgage will be subject to lender approval. Terms of up to 7 years are available with some asset finance. A longer term may suit equipment and machinery with a high dollar purchase price. Shorter terms of 4-5 years are typically selected on acquisitions of motor vehicles. A longer term reduces the monthly repayment but attracts a higher total interest payable compared with a shorter term. A shorter term allows the commitment to be finalised earlier.

Chattel Mortgage is a secured funding where the goods being purchased are accepted as the security against the funds being loaned. This may be a motor vehicle, truck or business equipment. Acceptance of the goods as suitable security is subject to lender approval. No additional security or guarantee may be required but that is subject to lender approval. In some instances the lender may request additional security be provided.

The balloon amount is due to be paid in full at the end of the finance term. When the final monthly payment is made, the balloon is due for payment. The way the payment is a decision for the individual. Funding may be applied for to pay the balloon payment. The finance application would be processed, the current interest rate would apply, and the goods would be considered as used.

The monthly payments for Chattel Mortgage are not fully tax-deductible. The interest component of the repayment is deductible, as well as lender fees and charges. However, the remaining portion is not tax-deductible. The tax deduction derived from this financing is through depreciation of the asset.

The GST applicable to the purchase of the goods can be claimed on the corresponding BAS return. The full amount of GST is immediately claimable by businesses that are registered for GST immediately following finalisation of the purchase and finance. No GST is charged on the interest on the loan.

Yes, the ownership of goods purchased with this funding is immediately transferred to the buyer. As such, the buyer must record the goods in the accounting books as an asset/liability.

On settlement of the finance contract and the purchase of the asset, the ownership is transferred to the entity acquiring the goods. The goods serve as security for the funding. The entity is responsible for all costs associated with the ongoing running costs, maintenance, and repair of the goods.

The tax benefit realised with this financing is achieved through depreciation of the asset. The repayments are not tax deductible. The asset is entered into the balance sheet of the entity and is depreciated each year following the relevant ATO depreciation schedule and taxation laws.