FAQs

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.