Chattel mortgage finance for Australian businesses
A chattel mortgage is a common way for businesses to finance a vehicle, machine or piece of equipment. Even Financial Melbourne helps business owners across Australia compare chattel mortgage options from a panel of lenders and understand what they are signing before they commit.
What is a chattel mortgage?
A chattel mortgage is a loan used to buy a movable business asset, such as a ute, truck, trailer or piece of equipment. You buy the asset and the lender takes a mortgage over it as security until the loan is repaid. Once the loan is paid out, the lender’s security is released.
Chattel mortgages are generally used for assets bought for business purposes. Terms, repayments, fees and any final (balloon) payment vary between lenders and depend on your circumstances and the asset. All finance is subject to lender approval and eligibility criteria.
Who might consider a chattel mortgage?
- Sole traders, partnerships, companies and trusts buying an asset for business use
- Tradies and contractors buying a work vehicle or tools
- Owners of small and medium businesses upgrading or adding equipment
- Primary producers buying farm machinery or vehicles
A chattel mortgage is one of several asset finance structures. Others include hire purchase, finance lease and operating lease. The right choice depends on your business, the asset and your accountant’s advice. We can talk through the options with you.
What you may need to provide
Requirements differ by lender and loan, but commonly include:
- Photo ID for the applicants and guarantors
- Your ABN and details of your business structure
- A quote, invoice or contract of sale for the asset
- Recent business bank statements
- Financial information such as tax returns or financials, or a lender’s alternative documentation, where available
- Details of existing debts and commitments
For a private sale, lenders often ask for extra checks on the asset and seller. See our Private Sale Guide.
Common mistakes to avoid
- Focusing only on the repayment. Compare the total cost of the loan, including fees and any balloon payment, not just the repayment amount.
- Not planning for the balloon. If your loan includes a final payment, plan how you will meet it when it falls due.
- Choosing a term longer than the asset’s useful life. You may still owe money on an asset you no longer use.
- Assuming the tax treatment. GST and depreciation treatment depends on your circumstances. Speak to your accountant before you decide.
- Leaving the asset checks too late. Confirm the asset’s condition, ownership and any money owing on it before you pay, especially in a private sale.
- Ignoring the ongoing costs. Insurance, registration and maintenance are separate to the loan.
Chattel mortgage FAQs
Can I get a chattel mortgage for a used vehicle or equipment?
Many lenders finance used assets, but their policies on age, condition and seller type vary. Tell us about the asset early so we can check it against lender requirements.
Can I use a chattel mortgage for a private sale?
Some lenders do finance private sales, usually with additional checks. Our Private Sale Guide explains what to look for.
What is a balloon payment?
A balloon is an optional final payment at the end of the loan term, which lowers the regular repayments but must still be paid. It is not suitable for every borrower or asset.
Does a chattel mortgage affect my tax?
Tax treatment depends on your business structure and circumstances. This page is general information only. Please speak to your accountant.
How do I get started?
Use our chattel mortgage calculator to estimate repayments, then send an enquiry. Calculator results are estimates only and are not an offer or approval of credit.