What is a Chattel Mortgage?
A Chattel Mortgage, also known as an Equipment Loan, is a very popular equipment/vehicle finance option for businesses. It is an agreement where you, the Business Owner, purchase equipment/vehicles and allow the financier to take a charge of the equipment as security for the loan.
You own the asset and the financier holds it as security. As you are the owner of the equipment, you should be eligible to claim the GST as an Income Tax Credit in your next BAS. The interest component of the repayments along with the asset's depreciation is generally tax deductible. Though, we always recommend that you check with your accountant.
100% finance is available with this product as a deposit is usually not required. You are able to control your repayments by choosing a term that suits you: between 1 - 7 years depending on the asset. You can also customise the repayments by having a balloon payment (sometimes called a residual value) at the end of the term.
Furthermore, you can structure the loan to make a bulk payment or structured repayments. This is common for businesses that want to pay the GST back into the loan once it has been claimed or for businesses that have seasonal income. Rates and repayments are fixed for the duration of the loan, giving you certainty and clarity.
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