Chattel Mortgage

A chattel mortgage is a unique car financing facility which allows for instant GST benefits to a purchaser who accounts for GST on a cash basis.

What is a chattel mortgage?

A chattel mortgage occurs where a finance lender provides a loan or finance facility to a taxpayer and the taxpayer uses that facility to purchase a asset such as a motor vehicle. Unlike hire purchase agreements, under a chattel mortgage a taxpayer becomes the owner of the motor vehicle at the time that the agreement is entered into. Security for this form of car finance is a mortgage over the vehicle purchased.

How does a chattel mortgage work?

Under a chattel mortgage the finance provider funds the purchase of the vehicle. The customer takes ownership of the motor vehicle at the time of purchase.

The finance provider then takes a mortgage over the vehicle as security for the car finance.

Once the contract is completed, the mortgage is removed giving the customer clear title to the motor vehicle.

Chattel mortgage features

• Low establishment fees and monthly fees, no payout penalties
• Chattel mortgage terms range from 1 to 5 years
• A tax deduction is available if used for business use
• Chattel mortgage repayments are fixed for the term
• The Interest Rate is fixed for the term of the chattel mortgage agreement
• No GST is charged on the monthly chattel mortgage payment
• Customers registered for GST can claim the GST that is included in the vehicle purchase price

Who does a chattel mortgage suit?

A chattel mortgage suits someone who is going to use a motor vehicle predominately for business use, therefore this car financing product is used by companies, trusts, sole traders, partnerships and ABN holders.

Chattel mortgage taxation implications

A cash basis taxpayer for GST purposes is entitled to claim all of the GST input tax credit up to the luxury car tax threshold or depreciation limit of $57,180 in relation to an acquisition using the chattel mortgage product at the commencement of the arrangement.

The monthly repayment or balloon amount is not subject to GST.

Cash basis taxpayers still retain their rights to claim depreciation and interest on the motor vehicle acquired under a chattel mortgage facility.

Which car financing product is right for you?

Deciding on the right car finance option for your situation can sometimes be confusing. commercial hire purchase, chattel mortgage, car lease are just a few of the car financing options, Platinum Direct Finance can assist with your decision making and make the process simple and easy.

Why use Platinum Direct Finance?

The Platinum Direct Finance group of companies will finance over 800 million dollars worth of equipment and car finance this year! Due to this volume and buying power, we can give our clients access to the best boat finance rates and boat financing products across Australia.

Need further information?

If you require further car finance or car leasing assistants, either complete our friendly enquiry form or call an experienced finance consultant on 1300 554 553 today.

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