If you’re a business owner looking to finance a new asset, you might be wondering: is a chattel mortgage the right choice? Whether you’re investing in a new work vehicle or upgrading a vital piece of equipment, it’s vital that you secure the right finance to meet your business needs. But how do you know what kind of asset finance is the right choice for your business?
In Australia, the most popular choice for business asset finance is a chattel loan. But what is a chattel mortgage? In this blog, we’ll help you understand the ins and outs of chattel finance, including who will find them to be most beneficial.
What is a Chattel Mortgage?
Chattel finance is a type of business loan that can be used to purchase company assets such as equipment, machinery or vehicles. The business will own the asset outright from the date of purchase, but the lender will hold a mortgage over the asset as a form of security until the loan is repaid in full. It’s similar to a personal car loan but designed for businesses or individuals who will primarily use the vehicle for business purposes.
What are the Benefits of a Chattel Mortgage?
Chattel finance comes with a great range of benefits, including:
- Immediate Ownership: Unlike a leasing arrangement, a chattel loan gives you instant ownership of the asset.
- Reduced Interest Rates: Chattel mortgage rates are often lower compared to unsecured loans.
- Flexible Options: This kind of loan can offer more flexibility when it comes to repayment options and loan terms.
- Tax Benefits: Businesses may be eligible for a range of ownership and depreciation tax benefits.
- GST on Purchase Price: A business owner may be able to claim the full GST amount on the purchase price as an input tax credit in their next Business Activity Statement (BAS).
Who Can Benefit from Chattel Mortgage Car Finance?
While any eligible business can apply for a chattel loan, they may be particularly beneficial for:
Small to Medium-Sized Businesses
This kind of finance option can be ideal for smaller businesses that are focused on managing their cash flow. It allows business owners to immediately claim the full GST on the purchase price (reducing the upfront cost) and secure instant ownership of the asset while spreading out the cost over time.
Self-Employed Individuals
Self-employed individuals often need specific vehicles or equipment to run their businesses but may lack the initial capital to purchase these assets outright. Chattel finance may offer immediate tax savings (thanks to the GST input tax credit and deductions on depreciation and interest) while also making it easier to manage cash flow.
Businesses with High Capital Expenditure
Businesses that require substantial investment in equipment or vehicles can leverage chattel mortgages to reduce the immediate financial impact. By claiming the GST upfront and benefiting from tax deductions, these businesses can better manage their finances and invest in other areas of growth.
Find Competitive Chattel Mortgage Rates with Muscle Money
When it comes to financing your business assets, securing the right chattel loan can make all the difference. And shopping around for the best rates is crucial to ensuring you get a loan that meets your financial goals. But as a business owner, how do you find the time to do that kind of in-depth research? Fortunately, you don’t have to!
As experienced brokers specialising in asset finance, Muscle Money is here to help you navigate the complexities of chattel mortgages. We understand that every business is unique, which is why we tailor solutions that fit your specific needs. Contact Muscle Money today to explore competitive rates and find the perfect chattel finance deal for your business.
Contact us today and take the first step towards securing your business’s future.
Caleb Waye-Harris, Senior Manager of Asset Finance at Muscle Money, has almost 15 years of relevant experience in the finance industry. His extensive background includes project management, consumer and commercial lending and asset-based lending.
