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Ask The Experts > Chattel Mortgage

A Chattel Mortgage is a type of finance typically used for the purpose of purchasing vehicles or other business plant equipment.

You own the goods, however the financier retains title until final payment (hence the word "mortgage"). No residual is possible and deposits are not essential.

You can claim the allowable depreciation and interest as a tax deduction. GST does not apply to the monthly payments, however the GST on the purchase is recoverable at the time of purchase.

The Benefits of a Chattel Mortgage

The benefits of a Chattel Mortgage are as follows:

  • Depreciation and interest are tax deductible

  • A chattel mortgage provides flexibility in that it allows you to finance the full purchase price of the goods, include an upfront deposit or trade in

  • Goods purchased automatically become yours, however after the final payment the title of the goods is transferred to you

  • You may choose to structure your rentals to clear the debt in full over the term of your agreement.

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