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Chattel Mortgage

A Chattel Mortgage may also be known as an Equipment Loan or Bill of Sale. In essence, this is a loan agreement where funds are borrowed to purchase a vehicle or business equipment. The lender takes a mortgage or charge over the asset being purchased and funds the loan.



Unlike a Finance Lease or CHP, the business retains full ownership and title of the asset from the day it is purchased.

Deposits are optional and generally 100% finance is often provided.

As the business maintains title to the assets during the loan term, they are able to claim depreciation and interest charges of the loan agreement as business tax deductions.

Repayments may be tailored to suit the business cash flow and like CHP, a final balloon payment may be structured at the end of the loan term to assist with lowering repayments along the way. The Balloon payment may be paid out in full at the end of the term, or may be refinanced and extended for a further agreed term subject to a satisfactory credit assessment.

No GST is levied on repayments. If the business accounts for GST on a cash accounting basis as most SME’s do, then the business may claim the total input tax credit on the purchase of the equipment up front via the next BAS.

The Chattel Mortgage is today the most popular form of funding structure to most SME’s.