With a Chattel Mortgage the customer owns the car from the start of the agreement. The financier secures the loan by registering a charge over the car.
Benefits to Business
- Security is usually the asset itself - preserving access to working capital credit lines.
- No capital outlay - no upfront deposit needed, which means you can use your working capital for other core business needs.
- Equity - by taking equity in the car through a trade in or deposit you can reduce the amount funded and therefore the total interest paid.
- Input tax credits and tax deductions - provided you are registered for GST, you should be entitled to claim an input tax credit for GST included in the price of the asset acquired. And generally, the interest you pay plus the depreciation of the asset should be tax deductible to the extent the asset is used in your business.
- Tailoring to match your cash flow - interest charging cycles and repayment cycles aligned with your anticipated cash flow.
- Simplicity - loan repayments will be automatically debited from your nominated business account.
- Balloon payments - a lump sum payment at the end of the contract that settles the debt can be arranged for approved customers. This enables customers to pay a lower monthly installment during the term of the agreement, and then pay a balloon at the end of the term.
Goods and Services Tax (GST)
- Because the customer owns the car from the start of the agreement, any accounting of GST is between the customer and the supplier.
- From a taxation perspective the customer is treated as having acquired the car directly from the supplier via a loan at the commencement of the agreement.
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Business Car Finance
- Car Lease (Finance Lease)
- Commercial Hire Purchase (CHP)
- Chattel Mortgage
- Novated Lease (Finance Only)
- Novated Lease (Fully Maintained)