Quick answer
Under a chattel mortgage, the business takes title to the vehicle or machine on the day it's bought, while the financier lists its claim against that asset on the PPSR. Clear the debt and that listing comes off. Across Australia, it's the go-to setup for funding work vehicles and gear, and you can choose to leave a lump sum owing at the finish.
Key points
- You own the asset from day one.
- The lender registers security over it on the PPSR.
- Optional balloon reduces regular repayments.
- GST and depreciation treatment is a question for your accountant.
- Ownership
- Borrower, from day one
- Security
- The asset (registered on the PPSR)
- Assets
- Vehicles, trucks, machinery, equipment
- Balloon
- Optional
How a chattel mortgage works
- Pick the ute, truck or machine the business needs.
- The financier advances what you owe the seller, after any deposit or trade-in.
- Title passes to your business at purchase — no waiting.
- The financier’s claim goes on the PPSR so other parties can see it.
- Repayments run on a set schedule, with a lump sum at the finish if you chose one.
- The final payment clears the PPSR listing.
Chattel mortgage vs the alternatives
| Chattel mortgage | Hire purchase | Finance lease | |
|---|---|---|---|
| Title holder | Your business | Financier, until the last instalment | Financier |
| When it finishes | PPSR claim lifted | Title passes to you | Residual paid, asset handed back or term rolled |
| Typical users | Most businesses | Some businesses | Businesses preferring to rent |
GST and tax
Because the business holds title upfront, a GST-registered buyer can often pick up the GST credit on the purchase in the next BAS — car limits and private use can trim that. Interest charges and the asset’s decline in value may also come off taxable income. Every business is different here, so run it past your accountant and the ATO’s own guidance.
Balloon payments
Leaving part of the debt to be cleared in one hit at the finish keeps each instalment lighter along the way. The catch: when that day comes you must find the money, roll it into new finance or trade the asset. Size it to what you’ll genuinely have available.
What can be financed?
Cars, utes, vans, trucks, machinery, trailers, forklifts and most business equipment. Ready to talk numbers? Enquire here.
An illustrative example
A landscaping business buys a compact loader using a chattel mortgage. It owns the loader from day one, and the lender’s interest is registered on the PPSR until the loan is repaid. (Illustrative only.)
Other names you might hear
Brokers and accountants sometimes call this a goods mortgage. Search for either term in our A–Z index and you’ll end up here. Whatever label a financier uses, ask who holds title, what the claim on the PPSR covers and how the instalments are set — those answers matter more than the name.
Related entries
You’ll find this one with the rest of our trade, stock and asset finance options. It’s usually secured by the very item being bought, and with documents ready it can come together quickly. Nearby entries worth a look:
- Equipment finance — tools, tech and plant paid off while they earn.
- Business vehicle finance — utes, vans and cars backed by the vehicle itself.
- Truck finance — tippers, rigids, prime movers and trailers, new or second-hand.
- Machinery finance — loaders, diggers, tractors and factory lines.
Our Loan Finder lets you line them up side by side by purpose and security.
Traps worth sidestepping
- Picking a structure before your accountant weighs in. Owning, hire purchase and leasing each land differently at BAS and tax time.
- Running the term longer than the asset lasts. Still paying for a machine that’s been sold or scrapped is a familiar complaint.
- Buying used without checking the PPSR. A search takes minutes and shows whether someone else already has a claim over it.
- A lump sum at the finish that’s too big. Lighter instalments today need real money later.
- Leaving out running costs. Insurance, rego, servicing and fuel come on top of every instalment.
Questions to put to a financier
Before you sign, get clear answers on these:
- Is the quoted price GST-inclusive? That changes both the amount borrowed and any credit you claim back.
- How old can the asset be when the term ends? Older gear may mean a shorter term or money down.
- Can the end-of-term lump sum be adjusted? Match it to how long the asset will stay in the business.
- What cover do I need? Expect to need comprehensive insurance with the financier’s interest noted.
- What does paying out early involve? Find out how the figure is worked out up front.
Hazy answers deserve a follow-up, ideally in writing. A good financier won’t mind.
Own what you use
If you’re buying a vehicle or equipment for the business, a chattel mortgage is often the cleanest structure. Enquiring is quick, there’s no credit check when you first enquire, and we don’t send your details to a pile of lenders — one specialist handles it personally.
Please tell us what you’re buying, the price and whether you’re registered for GST. Accurate details mean the right structure. Start your enquiry.
Frequently asked questions
What does 'chattel' mean?
It's an old legal word for belongings you can pick up or drive away — anything that isn't land or buildings. A ute or a forklift counts.
What's the difference between a chattel mortgage and a lease?
Leasing is closer to renting: the financier keeps title and charges you for the use of it. A chattel mortgage puts the title in your name and the financier simply holds a claim over it.
Can I pay off a chattel mortgage early?
Usually, though there may be early payout costs. Check the terms.
What is the PPSR?
Short for Personal Property Securities Register — a single national database showing who holds a claim over things like cars, trucks and plant.