What Are Chattel Mortgages? Everything You Need to Know.
Whether you are looking for financing to buy equipment, purchase a new car, or make improvements to your business, a chattel mortgage is the most common loan instrument you will find on the market. However, you may have doubts about this type of contract, right? Don’t worry! We can help you!
At Westend Finance, we’ve been helping our clients in Perth obtain chattel mortgages to achieve their business goals for over a decade. Keep reading to learn more about this type of loan!
What Are Chattel Mortgages? Everything You Need to Know.
Whether you are looking for financing to buy equipment, purchase a new car, or make improvements to your business, a chattel mortgage is the most common loan instrument you will find on the market. However, you may have doubts about this type of contract, right? Don’t worry! We can help you!
At Westend Finance, we’ve been helping our clients in Perth obtain chattel mortgages to achieve their business goals for over a decade. Keep reading to learn more about this type of loan!
A Chattel Mortgage Explained
A chattel mortgage is a loan you can use to purchase assets for business use. If you have a company and need equipment to support its operations, then this type of financing may be for you.
When you choose this option, the vehicle or equipment you purchase is used as security or collateral against the loan. Therefore, some consider it a “secured” loan.
Understanding How a Chattel Mortgage Works
A Chattel Mortgage is a formal term for the type of contract a business will typically use to finance equipment or a motor vehicle purchase.
A Chattel Mortgage contract gives the business ownership of the asset immediately.
This type of contract is a popular way for a business to fund their larger capital equipment purchases.
.
Chattel Mortgage: Benefits
In recent years, chattel mortgage options have become quite popular due to the multiple benefits they offer to businesses. Check them out here!
- Interest rates are typically lower than unsecured business lending.
- Finance 100% of the equipment or you can reduce the borrowing amount by adding a deposit.
- You can enjoy fixed interest and fixed repayments. Some lenders and Banks can structure the loan to suit the business income inflows, which works for seasonal income businesses.
- Repayments can be structured to suit a range of terms – normally 2 to 5 years.
- Balloon or residual payments can be included to reduce your initial payments. This option can protect cashflow and reduce the businesses fixed monthly commitments.
- If you choose this option, you own the vehicle or equipment from the start. The goods will become an asset on balance sheet and the loan will show as a liability.
- And more!
Our Chattel Mortgage Calculator
Do you want to estimate your monthly repayments? Use our calculator! Whether you plan to buy vehicles or equipment, it can help you determine how much money you need each month to cover the debt.
Frequently Asked Questions
A balloon repayment is an amount not paid off until the end if the contracted loan term.
If you structure a balloon payment in your chattel mortgage, you can enjoy many benefits. The main one is that you can reduce your monthly repayments to suit your cash flow.
However, you should be aware that a large balloon payment can significantly increase the amount of interest paid over the loan term.
It can be! This really depends on the type of business, equipment to be purchased, and the effective life of the equipment.
It can benefit business owners who need to purchase vehicles or equipment for their companies while protecting their cash flow.
A balloon option does add to the total cost of the loan, and you should always make sure the balloon payment agreed to is manageable and can be paid at the end of the contract. Normally you can refinance the balloon or simply sell the asset and pay of the finance.
A tax deduction may be available if you use a chattel mortgage to purchase business-related equipment or vehicles. We recommend you seek your own advice from your accountant regarding your circumstances and qualification for any tax benefits.
Some tax deductions you may be able to enjoy can include:
- Claiming the value of the vehicle or equipment as a depreciating asset.
- GST may be claimed as an Input Tax Credit on your Business Activity Statement (BAS) if you’re entitled to claim GST.
- You may be able claim interest payments as a tax deduction or expense.
Our team will go the extra mile to find competitive rates for you and your business!
- You may be able claim interest payments as a tax deduction or expense.
Some Of Our Lenders
Customer Reviews
