A chattel mortgage is the loan most businesses use to buy a truck, ute, trailer or machine. Your business owns the asset from day one, and the lender holds a mortgage over it as security until the loan is repaid. “Chattel” is just an old legal word for movable property.
How it works
- The lender pays the seller, and your business owns and uses the asset straight away.
- The lender registers its security on the Personal Property Securities Register (PPSR).
- You repay over an agreed term, usually at a fixed rate, so it’s easy to budget.
- You can add a balloon payment to lower the regular repayments.
- After the last repayment the security comes off, and the asset is yours with nothing owing.
If the loan isn’t repaid, the lender can claim the asset, much like a home mortgage, just on equipment instead of property.
How it compares
- Chattel mortgage: your business owns the asset from day one.
- Hire purchase: the lender owns it until the final payment. Repayments can look much the same.
- Finance lease: the lender owns it and you pay to use it, with a residual at the end. Can suit businesses that upgrade regularly or prefer to treat the cost as a running expense.
- Novated lease: for employees, paid from salary through a three-way agreement with the employer and the financier.
There’s no single best option. For a business keeping a truck, trailer or machine long-term, a chattel mortgage is the simplest and most common, and it’s what we arrange most often.
GST and tax
Because your business owns the asset, you can typically list it on your balance sheet and depreciate it. A GST-registered business can generally claim the GST in the purchase price, and the repayments themselves generally don’t attract GST.
These rules change from year to year, so confirm the details with your accountant before you commit.
We’re not accountants. This is general information, not tax advice.
What you’ll need
Most lenders start with an ABN, the director’s driver’s licence and details of the asset. Bigger loans and newer ABNs may also need bank statements, financials or proof of GST registration. Our guides to equipment finance and truck finance requirements go step by step.
We arrange chattel mortgages across our panel of 40+ lenders, for trucks, trailers and machinery. Get a quote or call 1800 958 510.
Common questions
Is a chattel mortgage the same as a car loan?
It’s a type of car loan, taken out by a business for a vehicle used mainly for work. A personal car loan is the consumer version; our car finance guide covers what each one needs.
Can a sole trader get one?
Yes. A chattel mortgage can be in the name of a company, trust or sole trader with an ABN, and it’s assessed on the business.
Can you pay it out early?
Usually, but many are fixed-rate, so paying out early can attract break costs or fees. Ask for a payout figure first, and tell us upfront if you plan to sell or upgrade before the term ends.
Can you make extra repayments?
It depends on the contract: some allow it, many don’t. If that matters to you, tell us upfront and we’ll place the loan with a lender whose terms suit.
Have a question about your deal?