Calculators & Tools
Chattel Mortgage Calculator - Business Finance Rates

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

Chattel Mortgage suits many types of business structures including SMEs, corporations, partnerships, family enterprises, sole traders and ABN holders. The suitability of this type of loan for a business is primarily associated with the accounting method used by the business. 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 business 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 loan application, lenders would take into account many aspects of the credit profile and creditworthiness of the business in approving the loan 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 type of loan which can suit many businesses including small and micro operations. As with all business finance applications, the applicant must have an ABN and identification. Lenders also request a range of financial documentation as part of the application.

The loan 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 loan product 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 business. A new loan may be applied for to pay the balloon payment. The new loan 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 and lender fees and charges are deductible. The remaining portion is not tax deductible. The tax deduction derived with this type of loan product 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 type of loan is immediately transferred to the buyer business. As such the goods must be entered into the accounting books of the business as an asset/liability.

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

The tax benefit realised with this type of loan is through depreciation of the asset. The repayments are not tax deductible. The asset is entered into the balance sheet of the business and is depreciated each year in line with the relevant ATO depreciation schedule and taxation laws.