Business finance
Chattel Mortgage
A chattel mortgage is a form of equipment loan where the bank or lender provide the funds to purchase a vehicle, asset or piece of equipment and then accept that item as collateral for the loan.
Loan size
$5K To $2M+
loan term
1 to 7 years
Interest rate
5% to 15%
Approval speed
Fast/Medium
Chattel Mortgage
Key features of a chattel mortgage
The hirer takes immediate ownership of the asset and retains ownership after the end of the payment period. Payment instalments are a combined interest and principal.
Compare a chattel mortgage
Advantages and disadvantages
Advantages
What are the advantages of a chattel mortgage
- Immediate ownership
- Low cash outlay
- Speedy application process
Disadvantages
What are the disadvantages a chattel mortgage
- Fees including early termination fees
- Risk of reposession
Common uses & good to know
Everything else about a chattel mortgage
Common uses
This form of finance allows you immediate ownership of the item without the corresponding upfront cash outlay.
This form of loan can often be executed quickly and with minimal paperwork.
As you, the hirer, takes ownership immediately, you are able to claim the depreciation of the asset.
Good to know
Should you default on your debt, the bank may repossess your asset or piece of equipment.
While lower cost than unsecured loans, chattel mortgages are more expensive than business loans secured by for instance property.
There may also be fees involved from setting up the mortgage to early termination fees that add to the cost of the loan.
Alternative Commercial Lending options
Other Business Finance Products
Secured Business Loan
A secured business loan is a loan made by a bank or finance company where the lender requires the borrower to pledge assets as collateral against the loan.
Unsecured business loan
Unsecured business loans are loans made without requiring business collateral such as property or inventory.
Trade finance
Trade finance is any form of finance that is issued to support international trade, including letters of credit, debtor finance, & export credit.
Using Debtor Finance to Manage Business Cash Flows
Any business owner knows the importance of managing cash flows to ensure that liquidity remains strong and that the business has the ability to take advantage of sudden growth opportunities or big contracts. Late payments impact businesses severely as cash that could otherwise be reinvested in growing stock, marketing or
Chattel mortgage FAQ
Frequently asked questions
As is the case for all equipment loans and leases, the fact that a chattel mortgage gives the lender collateral in terms of the asset leased means that the lenders may take a slightly more flexible approach to your credit score and operating history.
