What is a Chattel Mortgage?
The Ins and Outs of Chattel Mortgage Loans

Are you looking to finance your next car or piece of equipment and keep running up against the term “chattel mortgage”?

If you’re wondering what chattel mortgage is, the experts at Loan Monster are here to help.

What is a chattel mortgage?

The term chattel mortgage is just a financial name for the agreement between an institution, such as a bank, to provide you with the funds required to purchase an asset. Assets, in this case, can be in the form of a vehicle or piece of machinery or other equipment.

The unique aspect of this type of mortgage is that the financed asset itself serves as security for the loan. Like other mortgages, this “goods loan” requires you to make monthly repayments for the duration of the loan term and/or until the loan is paid off.

Usually, you are able to claim interest on the loan and tax depreciation of the vehicle or equipment if they are used to produce revenue for your business or work.

The Benefits of a Chattel Mortgage

A chattel mortgage loan offers a number of key benefits.

1. Flexible Terms

Most chattel mortgage finance providers allow a range of terms when structuring your repayments. Usually, the minimum term is 2 years and the maximum is 7, but between 2 and 5 is most common.

2. Competitive Interest Rates

Because a chattel car loan is a secured loan, the interest rate offered tends to be lower and more competitive than other forms of mortgages. Plus, with options of both fixed and variable rates, you can tailor your mortgage to suit your needs.

3. Ownership of the Asset

Another unique benefit is that you own the asset upfront and from the beginning. This can be very impactful as the asset can appear on your balance sheet as well as the financed loan appearing as a liability.

4. Balloon Payments

Balloon payments – or residual payments set at the end of the loan term – can be an effective way to lower your monthly repayments during the term. This isn’t an option for most other financial mortgages, such as for a home.

5. Tax Implications

As mentioned above, the potential tax deductions on a work vehicle or piece of equipment can help save you and your business a significant amount of money in the long term.

Chattel Mortgage Loans: Frequently Asked Questions

How do the tax benefits work?

Obtaining chattel mortgage car finance or an equipment loan allows you to claim tax deductions on a number of things, provided that it is used for your work and business.

  • The interest payments.
  • The depreciation value.
  • The GST credit. (This can be claimed as an input tax credit from the outset.)

We recommend speaking with your accountant to ensure you correctly identify and determine what aspects of your chattel loan can be claimed for tax deduction purposes.

What’s the difference between a lease, hire purchase and goods loan (chattel mortgage)?

It can be confusing with all these different terms swirling about the place. So, here’s a quick breakdown for you:


In a lease arrangement, you use a vehicle for an agreed lease period and make regular repayments. The car or vehicle is owned by the provider of the finance and depending on your agreement, you may or may not be able to purchase the asset at the end of the lease period.

Hire Purchase

With a hire purchase, the agreement is for you to purchase the vehicle or equipment over a period of time. Until paid off through regular payments the asset remains the property of the lender.

Goods Loan (Chattel Mortgage)

As we outlined above, a chattel mortgage car finance is when you – as the borrower – takes possession of the vehicle or equipment from the outset. The asset acts as security for the loan during the term period you are paying it off.

What is a balloon payment?

The balloon payment is the lump sum of money that needs to be paid to the lender at the end of the loan period. This residual amount of its left over value helps to lower the monthly repayments throughout the term of the loan.

Not all chattel mortgage finance providers offer balloon payment options, and they may not be best suited for every individual’s situation.

What’s the right chattel loan option for you? Ask the Loan Monster!

At Loan Monster, our lenders are knowledgeable and experienced in the many options for financing your new work vehicle or equipment – including chattel mortgages.

Whether you want to know more about the chattel mortgage requirements or would just like to know what options are available for you, contact us today!


Are you looking to refinance? Want to buy your very first home? Need an investment property loan? We can take care of it all for you at Loan Monster. Get in touch with our team and let’s get started today.

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