Eager to expand your business with new assets but unsure how to finance it? We offer both chattel mortgage and hire purchase products to help grow your business operations faster.
When deciding whether chattel mortgage or hire purchase is the right product for you, there are a number of key considerations you’ll need to look at including the differing ownership implications, tax benefits, and overall flexibility each form of finance offers. Additionally, your business needs, financial situation, and the type of asset you’re acquiring can influence the decision.
By coming directly to our experienced brokers, your specific situation will be analysed to determine which business equipment loan best suits your requirements.
When considering business loans, it's essential to evaluate several key aspects to ensure the best financing solution for your needs, including your business needs, financial situation, and the type of asset being financed.
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Chattel Mortgage is ideal for businesses that need immediate ownership and long-term use of an asset. If an asset is essential for business operations, chattel mortgage is the ideal choice. Financing via hire purchase is best for businesses wanting to try before they buy. Providing flexibility in ownership, hire purchase means the asset can be replaced or upgraded regularly.
Offering full control of an asset from the start, chattel mortgage is best for businesses that want to modify or use an asset without restrictions. With hire purchase, this flexibility and control is only available after the final payment.
A big difference between chattel mortgage and hire purchase is that chattel mortgage requires an upfront deposit which can affect the cash flow of a business. With hire purchase, typically no initial deposit is required which can help to keep cash flow consistent.
Typically, only businesses with a strong credit profile and the ability to provide an upfront deposit will be approved for chattel mortgage. Hire purchase is more suitable for businesses with limited access to immediate funds.
Both chattel mortgage and hire purchase offer tax benefits. Chattel mortgage provides immediate tax benefits through depreciation and interest deductions, while hire purchase offers tax benefits throughout the term via deductions on both the interest and principal payments. Chattel mortgage is best for businesses looking to maximise tax deductions in the short term.
Assets with a long useful life that depreciate over time (heavy machinery, vehicles, large equipment) are best financed by chattel mortgage. Assets that have a typically shorter useful lifespan (technology or office equipment) are best financed by hire purchase.
Assets that keep their value over time are good candidates for chattel mortgage. Quickly depreciating assets or lower-value assets are best financed by hire purchase.
Our guides offer quick comparisons and simple explainers to help you clearly understand the financing process with confidence.
At Jade Finance, our superior negotiating skills and strong bargaining power across multiple lenders means you’ll receive the best deal for you. We prioritise your interests while bringing our extensive expertise to provide practical financial solutions for businesses of all sizes.
With immediate ownership, tax advantages, and flexible repayment terms – securing your next asset with chattel mortgage is hard to look past. These features have the ability to boost cash flow for your business by reducing monthly repayments, providing GST refunds, and allowing for tax savings through depreciation and interest deductions. By gaining immediate ownership of the asset from the start, you will receive greater control and enhance in turn productivity and the generation of revenue will be enhanced.
An important drawcard for financing via chattel mortgage is the cash flow benefits it can provide. Offering reduced monthly payments through balloon options, upfront GST claims, and tax savings from depreciation and interest deductions – chattel mortgage is one of our most popular financing products.
Call us or request a free quote to get started.
Financing with hire purchase offers fixed interest rates, predictable repayments, and a variety of potential tax benefits. With fixed interest rates, businesses can enjoy stability in their financial planning as monthly payments remain constant throughout the term. Additionally, hire purchase allows businesses to spread the cost of expensive equipment over time, contributing to preserving working capital and improving cash flow management while allowing immediate access to the required asset/s.
Whatever industry you operate in, and whatever equipment and machinery you require to run your business, Jade has a wealth of brokers ready to help you out. Our finance solutions for businesses are highly sought after in the lending market as an established Australian-owned company.
We can help you discover more. Contact us today.
| Criteria | Chattel Mortgage | Hire Purchase |
|---|---|---|
| Ownership | Immediate ownership. | Ownership transfers at the end of the agreement term. |
| Title | Lender holds a mortgage over the asset. | Lender retains ownership until the final payment. |
| Depreciation | Depreciation can be claimed from the start. | Depreciation can only be claimed after final payment. |
| Interest Deductions | Interest is tax deductible. | Both interest and principal payments are tax deductible. |
| GST | Can claim the full GST upfront if registered. | GST can be claimed progressively. |
| Repayments | Fixed repayments. Optional balloon payment. | Fixed repayments. No option of a balloon payment. |
| Upfront Costs | Requires an initial deposit. | Usually no initial deposit. |
| Usage | Full control and flexibility from the outset. | Control is restricted until final payment is made. |
| Payment Terms | Can be tailored to match business cash flow. | Regular fixed payments throughout the loan term. |
| Balance Sheet | Both the asset and liability appear on the balance sheet. | Asset appears on balance sheet only after final payment. |
| Credit Profile | Immediate ownership of the asset can improve credit profile. | No immediate impact to credit profile until ownership transfers following final payment. |
Both chattel mortgage and hire purchase asset financing options offer advantages tailored to different business needs. In many scenarios, one loan option might be more suitable to the other. Our licensed consultants at Jade are dedicated professionals who will guide you through the loan process, empowering you with all the information you need as well as the best deals.
We believe credit should enhance your business, which is why we ensure every loan is a beneficial solution for your success.
| Chattel Mortgage | Hire Purchase |
|---|---|
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Let’s find what will work best for your needs by starting with a free finance quote.
When applying for any kind of finance, there are specific eligibility criteria a borrower will need to meet. For chattel mortgage and hire purchase asset financing options, eligibility is relatively similar, but there are a few key differences to be aware of.
The application process through our expert brokers at Jade Finance involves an initial consultation, documentation gathering, submission, credit assessment, approval and terms, and agreement signing. Following this application phase, the funding and repayment process commences.
In structuring the right loan for you, your Jade consultant will discuss your objectives and tailor the finance deal to suit you. Get in touch to begin.
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THE INTEREST RATE IS CALCULATED ON A SECURED LOAN PREDOMINATELY FOR BUSINESS USE, EFFECTIVE 15/11/2024 AND SUBJECT TO CHANGE. WARNING: THE INTEREST RATE IS TRUE ONLY FOR THE EXAMPLES GIVEN AND MAY NOT INCLUDE ALL FEES AND CHARGES. DIFFERENT TERMS, FEES OR OTHER LOAN AMOUNTS MAY RESULT IN A DIFFERENT INTEREST RATE.
The main difference between a chattel mortgage and a hire purchase is that with a chattel mortgage, the borrower will own the asset immediately. Under hire purchase, the lender will retain ownership until all the payments have been made.
When you finance with chattel mortgage, you might have the ability to claim depreciation and interest deductions on the asset. Additionally, if registered for GST, you can claim it from the outset.
With chattel mortgage, the borrower will have immediate ownership of their asset. In hire purchase, the lender retains the ownership until the final payment – after this payment, the ownership will transfer to the borrower.
Vehicles, machinery, equipment, and other high-value business assets that depreciate over time.
Generally speaking, a hire purchase agreement will not require an initial deposit. This provides benefits to cash flow in the beginning. Regular fixed payments are usually required for the loan term.
Chattel mortgages can typically be paid off early, however some lenders may charge early repayment penalties so it’s important to check the terms of your agreement.
The application process for these loan products is similar. Both involve financial documentation and credit assessments. The main difference is that chattel mortgage will require asset appraisal and an upfront deposit.
Both chattel mortgage and hire purchase can have positive impacts on a business’ credit. This will usually happen if repayments are made on time because it shows creditworthiness and responsible financial management.
When looking to obtain a hire purchase agreement, you will need to have a good business credit score, financial stability, time in business, and financial documentation such as tax returns and bank statements.
For new businesses with limited cash flow, hire purchase is the better financing option. This is because it requires no upfront deposit, as well as predictable fixed payments over the loan term.
