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Chattel Mortgage


A chattel mortgage is a business loan where the borrower actually owns the goods upon payment by the financier to the supplier. All of the GST is often claimed back in the business' first BAS following the purchase (subject to the asset being used predominantly for business use). The borrower has the option of having a balloon payment (a lump sum payment), which means lower ongoing monthly, quarterly, six-monthly or annual payments. Alternatively you can pay out the loan completely by making higher payments and ending up with a zero balance at the end of the term.

Chattel Mortgage is a finance tool for acquiring capital equipment. The assets can range from small office equipment up to large mining equipment which have a life of several years or more.

Manufacturing equipment.
Engineering equipment.
Cars, trucks and commercial vehicles.
Computers, telephone systems, office equipment.
Earth Moving & mining equipment.

This product is suitable for smaller businesses that are under the simplified tax system and have a turnover less than $2 million. You are able to pool assets and claim the one depreciation rate of 15% in the first year and 30% diminishing value after that, no matter what type of asset is being financed.

With a Chattel Mortgage, the business can claim depreciation on the asset and to businesses who report GST on a cash basis, you are entitled to claim the GST in full at the lodgement of your next BAS. You can also claim interest on the loan, but you’ll have to pay set up costs including stamp duty up front.

The loan is secured by the asset being purchased and the financier takes a mortgage over that asset. If your business trades as an incorporated institution the financier registers a charge against your company.

To complete a Chattel Mortgage application without obligation, click here, or telephone 02 4626 6677 to talk with one of our motor vehicle and equipment finance specialists.

 

 


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