A chattel mortgage is the finance structure most businesses use to buy a truck, ute, trailer or piece of machinery. Your business owns the asset from day one, while the lender takes a mortgage over it as security for the loan — hence the name.
What is a chattel mortgage?
“Chattel” is just an old legal word for a movable item of property — here, the truck or machine you’re buying. It works like this: the lender pays for the asset, you own it and start using it in the business straight away, and you pay the lender back over an agreed term. The lender registers their interest over the asset (on the Personal Property Securities Register, the PPSR) so it’s their security while the loan runs.
If the loan isn’t repaid, the lender’s registered interest gives them a claim over the asset — similar in concept to how a home mortgage works, just applied to equipment or vehicles instead of property.
Who actually owns the asset?
Your business does, from settlement. This is the key difference between a chattel mortgage and a lease: with a chattel mortgage you’re the registered owner throughout the loan, which typically means you can also claim it as a business asset on your balance sheet and depreciate it, subject to your accountant’s advice and the tax rules that apply to your business at the time.
Chattel mortgage vs other finance types
Chattel mortgages sit alongside a few other common structures — finance leases, novated leases and hire purchase are the ones we’re asked about most. Each has different implications for who owns the asset during the term, how GST is treated on the purchase, and how repayments are structured. There’s no single “best” option — it depends on your business structure, how you use the asset, and your accountant’s recommendation. We can talk you through how each option applies to your specific purchase.
Balloon payments
Chattel mortgages are often structured with a balloon (residual) payment — a lump sum due at the end of the term that reduces the regular repayments along the way. We’ve written a separate guide on how balloon payments work if you want the detail.
GST and tax
Chattel mortgages can have GST and depreciation implications that are specific to your business (for example, whether you’re registered for GST and how you account for it, and what depreciation or write-off rules currently apply to the asset). These rules do change from year to year, so we always recommend confirming the specifics with your accountant before you commit — we’re finance brokers, not accountants, and we’d rather point you to the right advice than guess.
Is a chattel mortgage right for your business?
For most businesses buying a truck, trailer, or piece of machinery they intend to keep and use long-term, a chattel mortgage is the simplest and most common structure — and it’s what we arrange most often, across our panel of 40+ lenders. If you’re financing a truck, trailer or piece of machinery, talk to us about which structure fits your situation.
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