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What’s a chattel mortgage?

Tax effective car ownership, for businesses & sole traders.

What’s a chattel mortgage?

A chattel mortgage is an extremely tax-effective car finance product that allows the ownership of the vehicle to sit with a business, a Trust or an individual with more than 50% business use. The finance company holds a mortgage on the car (the ‘chattel’) as security, and at the end of the term (anywhere from one to five years) you have the option to make a predetermined ‘balloon’ payment, and own the car outright.

The tax benefits of a chattel mortgage

Depending on the level of business use, the tax benefits are as follows:

  • Claim GST on the purchase price in the first Business Activity Statement, if you’re GST registered.
  • Claim the interest on the finance as a tax deduction.
  • Claim the depreciation, up to the depreciation limit, as a tax deduction
- Claim the
  • running costs as a tax deduction.

How do you qualify for a chattel mortgage?

If you have more than 50% business use, or you put the vehicle in the name of a company or Trust, it can be financed with a chattel mortgage. If you’re a sole trader, business owner or company director, it could be just what you’re looking for.

Cash flow benefits of a chattel mortgage

As you can tailor the size of the payments with a chattel mortgage, you can fine tune the finance to suit your cash flow. Once you know how much you’re prepared to pay every month, you need to make some decisions on the following:

Length of term
Balloon payment

How can we help?

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