Everything you need to know about chattel mortgages

Posted on Friday, June 9, 2017 - 13:34

There are plenty of cars in Australia. That’s a clear sign that Aussies truly love their vehicles. According to Performance Drive, it appears that the best-seller is Toyota, with 209.640 units sold in 2016.

However, it’s clear that not everyone affords a car with an upfront payment. That’s where a chattel mortgage comes in quite handy. But what exactly is that?

What Is a chattel mortgage?

If you opt for a chattel mortgage, financier will lend you the money you need to buy the car you want. The car will be yours as fast as you’ve purchased it, but the lender will place a mortgage on it until you’ve made all the repayments. This notion is not that distant from that of the simple lease, as you can see.

How does a chattel mortgage work?

Apart from being given the money to purchase your dream car, there are two other aspects about this that you should be familiar with. First of all, the said car is the “chattel.” The value of the loan is intrinsically tied to this chattel.

Second of all, let’s talk about the mortgage part. That is the loan in itself plus, of course, the interest you’ll be paying to the lender. In other words, the vehicle is yours and not yours at the same time. You’ll have complete, unwavering ownership over it once you’ve paid back the loan in full, plus the balloon payment.

You can either take a personal chattel mortgage or one for business purposes. In both circumstances, you will be the receiver of a set of benefits.

What are the benefits?

  • Eligibility for balloon/ residual value: this is important since you can mould the mortgage to fit your budget. Monthly payments can be lowered if you’re willing to pay a final rate that’s considerably larger.
  • You know all the costs beforehand: everything is transparent. The interest rates and the monthly payments are fixed, so there will be no room for unpleasant surprises.
  • Lower interest rates: the chattel mortgage is a secured loan. It is secured on the product you’re buying with the money you receive. In this case, it will be secured on your car.
  • Possibility of tax deduction: this works if you purchase a vehicle for your business.
  • Tempting terms: you can get a chattel mortgage for a term that ranges between 1 and 5 years, depending on your needs.
  • No GST (Goods and Services Tax) perceived neither on the monthly payments nor on the balloon/ residual value.


A chattel mortgage is of great help for those people that need a car but don’t have the money to pay it upfront. If you do not find this suitable, there are some alternatives that you can use. It’s entirely your decision which of them you are going to use. Given that the chattel mortgage offers you a lot of benefits, it’s not a bad idea at all to get one. Would you consider such a loan? Why?

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