Asset finance · chattel mortgage
You own the asset. The lender takes a mortgage over it.
The default structure for ABN holders buying business equipment or vehicles. You claim the GST upfront, depreciate the asset, deduct the interest. Usually the cheapest finance option if your business is profitable enough to use the deductions.
What it is, when it fits
Plain English, with the trade-offs.
A chattel mortgage is asset finance where the lender funds the purchase, you take legal ownership of the asset, and the lender registers a security interest (the mortgage) over it until the loan is repaid. From day one, the asset sits on your balance sheet as an owned asset, you claim back the GST on the purchase in your next BAS, and you can claim depreciation and interest as deductions. That tax treatment makes chattel mortgage the default choice for most profitable Australian businesses buying productive equipment. Repayment is structured as fixed monthly instalments over 1 to 7 years, often with a balloon at the end (up to 30% of the asset value is common) to keep monthly payments manageable. At the end of the term, you settle the balloon (refinance, trade in, or pay it out) and the lender's security is released. Pricing is competitive (6% to 11% p.a. for new equipment with established borrowers) because the lender's recourse to the physical asset is straightforward.
Tradie checking measurements on a residential build site.
Typical scenarios
Tradie buying a $65K work ute
Why: Sole trader, 3 years ABN history, GST registered.
Outcome: Chattel mortgage, 5-year term, 30% balloon, GST claimed in next BAS, depreciation deduction over 5 years.
Café buying a $40K coffee machine
Why: Established café upgrading from leased machine.
Outcome: Chattel mortgage, 4-year term, no balloon, weekly repayments matched to card-deposit cycle.
Transport business adding a truck to fleet
Why: Existing fleet of 6, adding a 7th prime mover.
Outcome: $220K chattel mortgage, 7-year term, 25% balloon, settlement aligned with truck collection.
Manufacturer purchasing CNC machinery
Why: Capacity expansion to take a new contract.
Outcome: $340K chattel mortgage, 5-year term, no balloon, repayments structured to coincide with project payments.
Lenders for this product
Who we work with.
- Pepper Asset Finance
- Angle Finance
- Metro Finance
- Selfco
- Allied Credit
- Macquarie Leasing
- Westpac Asset Finance
- NAB Equipment Finance
Lender accreditation varies; not every lender is available for every deal. We pick from the panel based on your specific situation.
How it works
From brief to settlement.
- 01
Asset and use confirmation
We confirm the asset (new or used, age, supplier), expected use case, and your tax setup. Lender appetite varies sharply on these inputs.
- 02
Best-fit lender selection
Three to five lenders typically fit each scenario. We send to the two with the strongest current rate appetite for your profile, not all of them.
- 03
Approval and supplier coordination
Approval usually returns within 24 to 48 hours. We coordinate documents directly with the supplier so the asset can be picked up on the agreed day.
- 04
Settlement and ongoing
Funds settle directly to the supplier, asset is released to you, GST claim flows through your next BAS. We check the rate at 12 months in case a refinance saves real money.
Indicative pricing & terms
Ranges, not promises.
Rate range
6 to 11% p.a.
Loan size
$10K to $5M
Term
1 to 7 years, balloon optional
Security
Registered mortgage over the asset itself
Indicative only; specific pricing depends on lender, security, and your business profile.
Frequently asked
Honest answers, plain English.
Chattel mortgage vs hire purchase, what's the difference?
Under a chattel mortgage you own the asset from day one and the lender registers a mortgage. Under hire purchase the lender owns the asset until the final payment. Tax treatment differs: chattel mortgage lets you claim GST upfront, hire purchase claims it across the life of the loan. For most profitable ABN holders the chattel mortgage is the better default.
When can I claim the GST back?
On a chattel mortgage you claim the full GST on the purchase price in the BAS period the asset is acquired, regardless of how long the loan term runs. Speak to your accountant about the specific timing for your reporting cycle.
How does the balloon work?
A balloon is a deferred final payment, typically 20% to 30% of the asset value. It reduces the monthly repayment across the term. At the end you can refinance the balloon, trade the asset in (using the residual to fund the next), or simply pay it out and own the asset outright.
Can I pay it out early?
Yes. Most chattel mortgages allow early payout, sometimes with a small early-termination fee but usually with rebated interest on the remaining term. We confirm the early-payout treatment for the recommended lender before you sign.
Can I sell or trade the asset before the loan ends?
Yes, but the loan needs to be paid out (or refinanced) at the same time the security is discharged. Most dealer trade-ins handle this routinely; private sales need a coordinated payout-and-discharge process.
Does my business need to be GST registered?
No, but if it is, the GST claim materially improves the economics. Chattel mortgage still works for non-GST-registered businesses; the GST claim is just out of scope.
Related products
If this isn't quite the fit.
Next step
Twenty minutes, no obligation.
Tell us the shape of the deal and the timing. We'll send a lender shortlist for chattel mortgage or, if it isn't the right fit, an honest signal of what is.