Tailored Commercial Financing Solutions
A chattel mortgage is a highly preferred commercial loan product for businesses and individuals seeking truck finance and one that many Credit One customers opt for. This financing option is ideal for a wide range of business structures and for purchasing various types of trucks and trailers.
How a Chattel Mortgage Works in Truck Finance
In a chattel mortgage, similar to a mortgage on a property, the truck or trailer (referred to as the chattel) is used as security against the loan. Upon signing the agreement and finalising the purchase, you take immediate ownership of the truck or trailer. Then, according to the finance agreement, you make structured monthly repayments. This setup is ideal for those seeking immediate ownership while having a predictable repayment plan.
Customisation and Flexibility
At Credit One, we recognise that every business has unique needs, and tailor our chattel mortgages for trucks to suit different financial situations. This includes the option to structure payments according to your business’s seasonal cash flows, ensuring that the financial plan aligns with your operational cycle. Whether you are a self-employed truck owner, a small to medium enterprise, or a large fleet operator, the chattel mortgage can be adapted to meet your specific requirements.
Potential Advantages of Choosing a Chattel Mortgage for Truck Finance
- Deposit Option: You can choose to pay a deposit to reduce the overall loan amount, leading to lower monthly repayments.
- GST Benefits: If you are GST registered, any GST on the truck’s purchase price can be claimed on your next Business Activity Statement (BAS), offering a significant financial benefit.
- Tax Deductions: The depreciation on the vehicle and the interest paid on the chattel mortgage may be claimed as tax deductions at the end of your financial year.
- Balloon Payments: A balloon payment, subject to lender approval, can be arranged. This is a lump sum payable at the end of the loan term, which can be tailored to suit your financial situation.
Chattel Mortgage Accessibility
Chattel mortgages are available for both new and used trucks, providing flexibility regardless of your preference or budget. This type of financing is especially suitable for businesses using a cash accounting method.
Professional Guidance and Advice
While our team will provide comprehensive details and guidance on chattel mortgages, we also recommend consulting with your accountant for advice tailored to your individual circumstances. This ensures that your financial decisions are in line with your business’s long-term goals and tax obligations.
For more information or to discuss arranging a chattel mortgage for your truck or trailer purchase, please feel free to contact us. Our commitment is to provide you with a financing solution that keeps your business moving forward.
Chattel Mortgage Truck Finance FAQs
Taking out a chattel mortgage for your truck is a major business decision, which is why we’ve tried to take any uncertainty out of the process with our frequently asked questions. Read through them below, and don’t hesitate to contact us if you have a question that we haven’t answered.
What exactly is a ‘chattel’ in the context of truck finance?
In truck finance, the ‘chattel’ refers to the truck or heavy vehicle itself. It’s a legal term used to describe movable personal property, as opposed to fixed property like real estate. In a chattel mortgage, the truck is used as security for the loan, while the borrower retains full use and responsibility for its maintenance and operational costs.
How does the ‘balloon’ payment work in a chattel mortgage?
In a chattel mortgage, the ‘balloon’ payment is a lump sum due at the end of the loan term. It’s often a percentage of the truck’s purchase price, agreed upon by the borrower and lender. This arrangement allows for lower monthly repayments, as they are calculated on the loan amount minus the balloon. At the loan’s conclusion, the balloon can be paid in cash, traded in, or potentially refinanced with a new loan.
Are payments under a chattel mortgage tax deductible?
While commercial finance facilities allow you to claim tax deductions, it works differently for each type. In a chattel mortgage, only the interest portion of the payment is tax deductible. The truck itself can be depreciated as a business expense according to current ATO rulings. Additionally, the GST on the truck’s purchase can be claimed on your first BAS statement after the purchase, leading to significant tax benefits.
Is a chattel mortgage similar to a home mortgage in terms of interest rates?
Despite the use of the term ‘mortgage’, a chattel mortgage for a truck is quite different from a home mortgage. A truck chattel mortgage typically has a fixed interest rate for the entire term of the loan. This means your repayment amount remains constant throughout the loan period, providing financial predictability and stability.
Can I finance both new and used trucks with a chattel mortgage?
Yes, our chattel mortgage options are available for both new and used trucks. This flexibility allows you to choose the vehicle that best suits your business needs and budget.
Is a chattel mortgage suitable for all business sizes?
Absolutely. Chattel mortgages are versatile and can be tailored to suit businesses of any size, from individual owner-operators to large fleet operators. They offer a convenient and cost-effective way to finance your truck while maintaining cash flow and operational efficiency.
