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Chattel Mortgage

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What is a Chattel Mortgage?

A Chattel Mortgage is a popular type of finance where the lender will provide funds to purchase equipment or vehicles and accepts that financed asset as the security for the loan. “Chattel” refers to the car or equipment, and “Mortgage” refers to the loan. It’s similar to a conventional fixed-rate home loan or mortgage. You get ownership of the asset and then pay off the loan from the income it generates in your business.

Benefits of a Chattel Mortgage

Chattel Mortgages are a good option for mid to high-value equipment with a medium to long lifespan (such as company vehicles or machinery) which is unlikely to become obsolete during the loan term. Benefits include:

  • No collateral is required as the financed asset provides security 
  • Options to repay the mortgage early if you can afford extra repayments.
  • Own the asset now and pay it off over time
  • Lower interest rates and fees than an unsecured loan such as a consumer car loan
  • Flexibility to include balloon payments to lower monthly repayment costs.
  • Claim tax deductions on interest component and depreciation of assets value
  • Option of a balloon payment to make your regular repayments lower
  • Choice of short loan terms (usually between 2-5 years) to suit your cash flow
  • Reassurance of fixed interest rates and cost of repayments 
  • Flexible repayment (monthly, quarterly, half-yearly or annually) terms 
  • Finance a vehicle if it is used for business purposes 51% of the time

What Businesses use Chattel Mortgages?

  • Civil & Construction
  • Manufacturing
  • Medical
  • Tradies
  • Catering 
  • Cleaning companies
  • Road Transport services
  • Engineering shops
  • HVAC technicians
  • Automotive
  • Removalists

How does a Chattel Mortgage work?

Chattel mortgages can be a great financing option for your business. With a fixed-term contract and a steady interest rate, they offer stability and predictability. When you go for a chattel mortgage, the lender provides the funds you need to buy vehicles or equipment, and the best part is, your company gains full ownership of the asset right from the beginning.

The process of a chattel mortgage is pretty straightforward. You’ll make regular repayments to the lender over a fixed period. Once you’ve paid off the loan completely you officially become the sole owner of the asset. 

However, the lender will need some assurance, just like a home loan is secured against property. Often they’ll register a mortgage over the asset, similar to how property is used as security for a home loan.

It’s important to remember that responsible finance management is crucial as your finance provider may repossess your car or equipment if you can’t meet your repayments. Which is why open communication and planning can make the chattel mortgage journey smooth and rewarding for your business.

Step-by-step Chattel Mortgage process

1. Loan application

Your business applies for a Chattel Mortgage to purchase assets supplying all relevant details, including income statements, equipment make and model, dealer or supplier information, price quotation, and their terms of payment.

2. Background check and release of funds

The lender conducts background investigation, coordinates with the dealer or suppliers, processes loan applications, and then releases funds to your company.

3. Purchase assets and sign papers

Your company purchases the equipment, processes the necessary paperwork, and takes ownership. A Chattel Mortgage contract is then completed and exchanged with the lender.

4. Lender registers Chattel Mortgage

The lender executes a chattel mortgage over the asset as security for the loan by registering it with the Personal Property Securities Register (PPSR).

5. Pay off assets over time

Your company makes repayments to the lender as agreed (including residual balloon payments if included) at the end of the term.

6. Receive legal title to the asset

Once payment is complete, the lender removes security on the asset giving you legal title to the vehicle or equipment.

How to apply for a Chattel Mortgage

Discuss your asset requirements with us.

Contact principal broker Brin Hayden to discuss your needs, and we’ll begin the process. We’ll source a suitable finance provider and ensure all your necessary information is in order to secure the equipment or vehicle finance you need.

Organise and lodge application

You provide the requested completed documents and we will organise and lodge the application on your behalf. In addition to business documents, you will need to satisfy the following:

  • Have a valid Australian Business Number (ABN)
  • Supply account number and BSB of your main business account
  • Have been in business for at least 12 months
  • Asset to be used for business purposes at least 51% of the time
  • Meet the lender’s minimum credit requirements

Gain approval and secure funding

We can source a provider, help you organise and verify your documents, and assemble your application in as little as one business day. Funds can be available within 24 hours of application approval.

Why Choose Cabbage Capital as Your Finance Broker?

Our founder and principal broker, Brin Hayden, brings over 20 years of experience in the commercial sector, focusing on financial solutions for small to medium enterprises to provide a real impact.

“We get small businesses and understand their struggles. You may have an excellent credit score, or maybe you haven’t. Whatever, I’ll bring a personal approach and work with you to find the best equipment and asset finance for your situation. Unlike the banks or individual finance providers, I’m not limited to just one or two Chattel Mortgages. I source finance from our network of 30+ competitive lenders vying for your business. Then negotiate the best rates and terms to fit you.

Chattel Mortgages are a great way to grow your business and take ownership of new vehicles or machinery without putting up extra collateral. And you get the reassurance of fixed interest rates, flexible terms, and tax breaks to help your cash flow. If you’re thinking of an upgrade, expansion or getting the tools to take your business to the next level, talk to me.”

Brin Hayden

Founder and principal broker

“Chattel Mortgages are a great way to grow your business and take ownership of new vehicles or machinery without putting up extra collateral.”

Let’s get started

If you’d like to book a meeting to discuss your needs or start a finance application, leave your details, and we’ll get back to you within 24 hours.
Alternatively, call Brin at 0418 574 655. 

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