What is a Chattel Mortgage?

A chattel mortgage is as a business finance product wherein a bank or financier takes a security charge over the vehicle or other asset to be financed with set monthly repayments in the form of instalments over a predefined term. Generally the term varies from 12 to 60 months. The client may also incorporate an agreed balloon/residual value at term end in line with the likely value of the asset at that time.

Advantages of Chattel Mortgage

Chattel mortgage is a popular option to acquire a motor vehicle or other asset. Some of its attractions are:

• Clients on either an accrual or cash accounting basis for GST can claim the full GST component when lodging their next BAS
• Depreciation on the vehicle or asset is tax deductible, if it is used to generate income or the expense is required in carrying on a business
• Interest charged is tax deductable
• The monthly instalment is fixed over the term of the agreement
• 100% finance available

(Independant professional financial and tax advice must be sought to determine all tax and GST issues)