Under a Chattel Mortgage a lender gives money to a customer in order to purchase a vehicle or equipment and the customer makes regular repayments. The individual or business financing the equipment takes immediate ownership of the items at the point of purchase for tax purposes, but the lender also takes out a mortgage over the goods with a ASIC-registered Fixed and Floating Charge to provide security for the loan.
Chattel mortgages are best suited to businesses that use the cash method of accounting as it allows Tax Credit Inputs to be claimed for the full GST amount at the next BAS lodgement.
Key benefits of Chattel Mortgage:
- Depreciation of the equipment and the interest paid can be claimed as a business expense if the items are being used for business purposes
- Flexible terms ranging from 1- 5 years
- Option of adding a residual (balloon) payment
- Flexible repayment options that suit the needs of your business
The equipment itself is used as the security against the loan, meaning that no further security is generally needed.