On the completion of the final payment under a Chattel Mortgage, the security interest is removed by the lender and full ownership of the vehicle is transferred over to you. Chattel Mortgages are commonly used by companies, and self employed people to fund the purchase of cars, commercial vehicles and other business equipment.
If you are planning to use your vehicle primarily for work purposes, then a chattel mortgage might just be the perfect finance option for you. The biggest difference between this kind of finance option and a consumer loan is that the lender secures the loan against the vehicle, resulting in lower interest rates.
Another benefit of Chattel Mortgage is that if you have a vehicle to trade in, or wish to make an initial deposit, you are free to do so, allowing for better flexibility of cash flow management.
key features of Chattel Mortgages:
- Flexible contracts ranging from 1- 5 years
- The interest rate is fixed over the term of the loan
- A residual value payment can be applied to the payment scheme, lowering your monthly repayments
- A deposit (including trade-ins) can be used lower the loan amount
- A tax deduction is possible when the car is used predominantly for work purposes
- There is no GST applied to your monthly repayments
- Because the loan amount is secured against the car, the interest on the loan is reduced
This type of finance option is best suited to businesses, companies and sole traders that use the cash method of accounting, as it allows them to optimise their loan structure and repayments for tax purposes.
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