What is a Chattel Mortgage?
This structure is particularly advantageous for businesses looking to claim tax benefits such as depreciation and interest expenses while maintaining operational flexibility.
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Off-Balance Sheet: Equipment isn’t listed as an asset or liability.
How Does a Chattel Mortgage Work?
To secure the loan, the lender places a “mortgage” over the asset by registering their interest with the Personal Property Securities Register (PPSR). This registration ensures the lender’s rights to the asset until the loan is fully repaid. Once the borrower has met all their repayment obligations under the agreement, the lender’s security interest is released, granting the borrower clear and unencumbered ownership of the asset.
This arrangement is an excellent choice for businesses seeking to own essential assets while leveraging flexible payment terms.
Key Features of a Chattel Mortgage
Flexible Loan Terms: Choose contract terms that suit your business needs, ranging from 12 months to 84 months (1 to 7 years).
Fixed Rates for Predictability: Enjoy the certainty of fixed interest rates and consistent monthly repayment amounts throughout the term of the loan.
Customisable Repayments: Incorporate a residual value (balloon payment) into the loan, allowing you to adjust monthly repayments to align with your budget and cash flow requirements.
GST Claimable for Registered Businesses: Businesses registered for GST may claim the GST included in the asset’s purchase price as an input tax credit on their next Business Activity Statement (BAS).
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