Under a Chattel Mortgage the financier advances funds to the customer to purchase a vehicle, and the customer takes ownership of the vehicle (chattel) at the time of purchase.
The financier then takes a "mortgage" over the vehicle as security for the loan, by registering their interest over it with the PPSR.
Once the contract is completed, the security interest is removed giving the customer clear title to the vehicle.
Benefits of a Chattel Mortgage
- Flexible contract terms ranging from 12 to 60 months (one to five years)
- A residual value (balloon) can be applied to the contract enabling the monthly repayments to be tailored to a budget
- Fixed interest rates
- Monthly repayments are fixed
- Costs are known in advance
- Deposit (either cash or trade-in) may be used
- A tax deduction is available when the vehicle is used for business purposes
- A customer who is registered for GST can claim the GST component of the purchase price as an input credit on their next Business Activity Statement (BAS)
- No GST is charged on the monthly repayment or the contract balloon amount