Why a chattel mortgage is a better choice

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Chattel mortgages: what are they, and how can they save your business money? If you’re in the business of unique cars, you’ll want to read our blog post


If you’re in the car business, you want to increase profit margins and make the best deals possible. One way of doing that is opting for a chattel mortgage over a traditional car loan. A chattel mortgage is the best choice for businesses who really mean business - that is, you’re using the car for at least 50% business purposes. Here’s why:

Chattel mortgages mean tax savings

Chattel mortgages are a better choice because you can make upfront tax deductions and throughout the life of the loan. Firstly, you’re purchasing a car as a cash sale, you can claim the GST on the purchase price. You can also claim the fuel input tax credit on your next BAS.

As you’re paying back the mortgage, you can claim all the interest on your repayments. You can also claim the tax breaks on depreciation up to the depreciation limit, as set by the ATO.

Chattel mortgages can be cash flow neutral

If you don’t want to put a strain on your working capital, a chattel mortgage need not interrupt your cash flow to a significant degree. Business can finance 100% of the value of the vehicle, and in some cases exceed that amount to amortise insurance, servicing and other accessories. Many lenders will work with you to adjust repayments according to cash flow ebbs and flows (such as for seasonal businesses.) You can work out just how much you’ll pay over the life of a loan using a car loan calculator.

Chattel mortgages are flexible

Chattel mortgages for cars can be packaged in many different ways. Your business can opt to incorporate a balloon payment into the term of the loan, offsetting your regular repayments and giving you options at the end of the loan to trade-in or purchase in full. You can also set variable terms, ranging from 12 months up to 7 years. This might be beneficial for certain businesses.

Chattel mortgages are easy to account for

Any car you purchase with a chattel mortgage is written up as an asset, which may be easier to account for in your ledgers. Other types of products may be considered expenses instead.

Chattel mortgages help business

Chattel mortgages are one of the great ways your business can thrive and expand using low-impact and high benefit loan products. For more information,  you should always contact a financial professional.

For more information, visit the Savvy Finance website

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