Jade Finance provides tailored Chattel Car Mortgage, at the cheapest interest rates, for the purchase of motor vehicles for business use. Chattel Mortgage is one of our most popular commercial finance products as many Australian businesses implement a cash accounting method - small owner-operators, SMEs and large corporations.
Chattel Mortgage is a highly effective and flexible finance product for the purchase of a single vehicle or an entire fleet, purchased new or used, from a dealer, auction house or from a private seller. It can also be used to refinance a balloon, residual or buy back or another loan contract.
Your Jade Finance consultant will work closely with you to understand your financial objectives and structure your Chattel Mortgage to meet your specific requirements.
Jade’s cheap interest rates form the basis for all our Chattel Mortgage offers.
The interest rate is fixed for the loan term.
The lending company takes security for the loan through a mortgage over the car, known as the chattel, until all repayments and balloon are finalised.
The borrowing business takes ownership of the vehicle from the time the loan and purchase are completed and has full responsibility for all costs such as registration, insurance, service and maintenance.
Additional expenses associated with the purchase – rego, insurance, dealer charges, on-road costs, extra warranties – may be included in the Chattel Mortgage to ease pressure on your cash flow.
No deposit required by the lender.
Monthly repayments are structured to suit your cash flow and fixed for the loan term.
As experienced brokers, we’re working in your best interests and have the flexibility to negotiate the cheapest interest rates, repayment terms and conditions to suit our clients.
Monthly repayments and balloon are not tax deductible. The interest portion of the repayment is tax deductible.
Terms available from 24 – 60 months.
The borrower can claim the GST on the purchase price of the vehicle at the time of purchase, ie on the next BAS.
GST is not applied/claimable on the monthly repayments, balloon or interest. GST is charged and claimable on fees and charges.
A balloon payment, usually represented by a percentage of the vehicle purchase price, may be included. This is due for payment after the final monthly repayment is made. The balloon payment may be refinanced through Jade Finance on a new finance agreement.
Depreciation is in accordance with ATO guidelines.
While Chattel Mortgage suits most businesses for motor vehicle and other equipment purchases, we recommend you consult with your accountant to confirm it is the best option for your business.
As Chattel Mortgage is a very popular finance facility, it is offered by most banks and finance companies. But unlike most banks and finance companies, Jade Finance includes the advantage of being able to source, compare and assess offers from a vast number of lenders. We’re not limited to only the offer made by one source.
Jade Finance is accredited with over 40 banks and lenders including the major Australian banks. With our superior negotiating skills and bargaining power, our consultants are highly effective and successful in achieving outstanding Chattel Car Mortgage deals for our clients.
If it suits your business strategy to organise your car Chattel Mortgage through your existing bank, your Jade consultant will handle the negotiations and much of the paperwork for you.
To save yourself time, paperwork hassles and receive the cheapest Chattel Mortgage, simply call Jade Finance and we’ll streamline the process for you.
Speak with a Jade Finance Consultant to discuss a Chattel Car Mortgage for your business motor vehicle purchase. Call 1300 000 003
Get a quote
Request a free finance quote by calling 1300 000 008 or directly online.
When utilising the finance calculator, please be mindful of these possible points: The resulting regular monthly loan repayment that is determined is not a specific financing quote, it is not a loan offer and it does not imply your application has been approved for that, or any other loan. The loan amount that you input might not be the final complete amount loaned as there might be extra charges and also costs used by the lending institution or bank. You can include an added amount in the finance total amount for the additional costs in relation to insurance, extended warranty or extra costs involved in what you are buying. This calculator is available to supply price estimate quotes based upon the input data only. It does not allow for individual application differences. The financing offer and also repayment amount you receive from your Jade expert may be higher or lower than the result you have calculated. The calculator is developed to calculate finance repayments based upon an inputed rates of interest over an established time period. It is not to be utilised for interest-only financing calculations. It calculates rate of interest and also payments by compounding calculation over the month-to-month term.
Your Chattel Mortgage FAQs Answered
Chattel Mortgage might have an odd name but it is the most popular form of commercial finance facility used by Australian businesses. This type of loan is versatile in that it can be used for many asset acquisitions and the goods purchases and suits many business structures. Despite the strange name, Chattel Mortgage for motor vehicles is essentially a very simple form of business loan. We’ve covered much of the detail in our web page, but to answer some more direct questions, we’ve provided these FAQs. For more answers, contact Jade Finance.
What is a chattel?
A chattel is an old world term which was used going back centuries to describe goods. It is still used today in legal documents and financial business contracts though some banks tend to be replacing Chattel Mortgage with the more simplistic Business Car Loan or Equipment Loan. In common law and according to definition, a chattel is property other than freehold land. That is tangible moveable goods and other belongings.
In financing, the chattel is the item or asset being acquired by the business. In regard to motor vehicle finance the chattel is the automobile or business vehicle that you are buying.
How does a mortgage on a car work?
As with our explanation of chattel, the use of the term mortgage in relation to business vehicle finance can be confusing. Most people associate mortgages with home loans and that tends to be the primary use of the term in Australian finance. In regard to Chattel Mortgage as a type of vehicle finance, the mortgage is the debt instrument or specifically the loan taken out to buy the car.
The mortgage is taken, or provided by the lender, for the chattel, being the vehicle. So in simple terms, this may translate as – auto loan. The mortgage is simply another term for loan. Terms such as mortgage are often maintained for use in legal documents and contracts. The legal fraternity and parts of the finance industry still tend to use historic terminology in official contracts.
How does the balloon work?
Chattel Mortgage has the option for what is referred to as a balloon. This is a percentage of the purchase price of the loan, not the entire loan amount, which is deferred for payment at the end of the finance term or interest only charged amount of finance. By deferred, it means it is not included when calculating the monthly repayments. Being due as a somewhat large amount in lump sum, it is considered a balloon.
Buyers in consultation with their Jade consultant and lender can decide on a balloon that suits their financial objectives. A larger balloon will reduce the monthly repayments while a smaller balloon will increase the payments so the loan can be finalised faster.
A balloon helps businesses to purchase more expenses vehicles at affordable repayments. However, it is advisable to keep in mind the projected value of the vehicle at the end of the loan term to ensure the balloon does not exceed that value. In that instance, you would owe more than what the vehicle is worth.
A balloon can be paid in full at the end of the loan term or refinanced with a new loan deal. Subject to lender approval and criteria.
Are repayments a business tax deduction?
A tax benefits is realised through a Chattel Mortgage but not via tax deduction on repayments. Only the interest portion of the monthly repayment is tax deductible. The taxation benefit is realised through the depreciation allowance associated with Chattel Mortgage.
With a Chattel Mortgage, the borrower takes ownership of the vehicle so the vehicle is listed as an asset/liability in the business accounts. At the end of financial year, when preparing the annual accounts and income tax return, the vehicle can be depreciated at the percentage set out by the ATO. This depreciation amount is a tax deduction. The vehicle is depreciated each year in accordance with the ATO depreciation schedule until the full value is exhausted.
The depreciation is only on the actual purchase price of the vehicle not the full loan amount which is why the interest portion of the monthly repayments and balloon is tax deductible as an expense.
Please note claims are subject to luxury car tax thresold set by the ATO
Is GST charged on Chattel Mortgage repayments?
GST applies to the purchase price of motor vehicles at the current rate of 10%. GST is usually included in the advertised price of a vehicle but additional charges may apply in regard to delivery charges etc. Registration does not attract GST. So when you receive the invoice from the atuomotive seller, the amount of GST payable on the purchase should be noted. Please note a private sale sold vehicle may not have GST.
The total invoice amount, including the GST, can be included in your total loan amount. GST is not charged on loan interest. As your business is taking ownership of the vehicle under a Chattel Mortgage, your business is liable to pay and claim the GST if you are registered for GST. This contrasts with Leasing where the vehicle is technically acquired by the lender and hence they claim the GST.
Under a Chattel Mortgage finance deal, the buyer can actually claim all the GST payable straight away – on the next BAS return. As the full amount of GST has already been claimed and because the lender is not actually charging you when you make repayments, GST does not apply to monthly repayments. So you pay and claim the GST essentially at time of purchase.
Please note the amount total you may claim is subject to luxury car tax thresholds.
What is cash accounting?
There are two main types of accounting methods used by businesses – cash and accruals methods. The cash method is the most widely used by Australian businesses as it suits many business sizes and structures. It is quite simple to follow – the business accounts are kept based on the money received and the money paid out when transactions occur. That means, you may wait 30 days for a customer to pay you, but you do not record the income until the time the money is received. Same with your expenses. You may wait 30 days to pay a bill, but you do not record it in your outgoings until you actually pay it.
The business accounts and income tax return are prepared based on whatever method selected by the business. Once selected, that accounting method must be maintained for that financial year. Chattel Mortgage is best suited to businesses that use the cash accounting method.
This method is differentiated from accruals accounting as accruals records income and expenses at the time the invoice is issued to a customer or a bill received, regardless of whether or not payment has been paid.
Is Chattel Mortgage suited to Instant Asset Write-Off?
Yes. Instant Asset Write-off and temporary full expensing are accelerated asset depreciation measures introduced by government as a taxation benefit to business. In March 2020, the Federal Government introduced IAWO to stimulate the economy out of the COVID-19 recession and expanded the measure with the inclusion of temporary full expensing in the October 2020 budget. Both these measures have time limits and eligibility criteria.
They allow businesses to depreciate and hence deduct, the full cost of an asset acquisition in the year of purchase rather than depreciate the asset incrementally over several years. In order to depreciate a vehicle, the equipment must be owned by the business and appear on the company books. This is what happens with Chattel Mortgage so it can be utilised with both IAWO and the more expansive full expensing for eligible vehicles and eligible businesses.
Who does Chattel Mortgage suit?
Chattel Mortgage as a type of finance suits all businesses that use the cash accounting method. Depending on the business structure that may include SMEs, sole traders, sole traders, partnerships, family enterprises, medium operations and large corporations.
It is the most widely used type of business vehicle finance which is testament to its versatility to suit many business structures. The simple format suits businesses that choose to own their vehicles and have them listed on their balance sheet.
Some businesses, especially start-ups, may not wish to have the value of a vehicle posted on their balance sheet as an asset/liability. So to improve the appearance of their balance sheet they may choose leasing rather than Chattel Mortgage.
Please remember when using this tool the calculation does not represent or indicate any offer for a loan quote or approval.