What is a Chattel Mortgage?
Now days probably the most common form of asset and equipment finance (for businesses), a chattel mortgage is essentially a mortgage over goods to be financed. Chattel mortgage is classed as a cash sale in that the goods automatically become your property on purchase and the finance company takes a mortgage over the chattels (assets).
Tax & GST:
Under a chattel mortgage a client may claim depreciation, running costs and the portion of the repayment attributable to business use. The chattel mortgage allows businesses to claim the full input tax credit from GST incurred expenses immediately (next BAS statement). GST is charged on the purchase price of the asset but not on the monthly rental or residual payment.
Cost of Finance:
Generally Chattels are the most competitive when it comes to interest rates against the finance.
There is however an additional cost of stamp duty which is paid against the total amount financed.