Chattel Mortgage

What Is A Chattel Mortgage?

A chattel mortgage is a unique car financing facility which allows for instant GST benefits to a purchaser who accounts for GST on a cash basis.

It occurs where a finance lender provides a loan or finance facility to a taxpayer and the taxpayer uses that facility to purchase an asset such as a motor vehicle. Unlike hire purchase agreements, under a chattel mortgage a taxpayer becomes the owner of the motor vehicle at the time that the agreement is entered into. Security for this form of car finance is a mortgage over the vehicle purchased.

How Does A Chattel Mortgage Work?

Under a chattel mortgage the finance provider funds the purchase of the vehicle by taking a mortgage over the vehicle as security for the car finance with the customer takes ownership of the motor vehicle at the time of purchase.

Once the contract is completed, the mortgage is removed giving the customer clear title to the motor vehicle.


  • Terms ranging from 1 to 5 years
  • Low establishment fees and monthly fees
  • No GST is charged on the monthly chattel mortgage payment
  • The Interest Rate is fixed for the term of the chattel mortgage agreement
  • A tax deduction is available if used for business use
  • Chattel mortgage repayments are fixed for the term
  • Customers registered for GST can claim the GST that is included in the vehicle purchase price
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Who Does A Chattel Mortgage Suit?

A chattel mortgage suits someone who is going to use a motor vehicle predominately for business use, therefore this car financing product is used by:

  • Companies
  • Trusts
  • Sole traders
  • Partnerships and
  • ABN holders.

What Are The Tax Implications Of A Chattel Mortgage?

A cash basis taxpayer for GST purposes is entitled to claim all of the GST input tax credit up to the luxury car tax threshold or depreciation limit of $57,466 in relation to an acquisition using the chattel mortgage product at the commencement of the arrangement.

The monthly repayment or balloon amount is not subject to GST.

Cash basis taxpayers still retain their rights to claim depreciation and interest on the motor vehicle acquired under a chattel mortgage facility.

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Got all the info you need and ready to apply for a Chattel Mortgage? Just complete our quick application form and one of PCL Moneys experts will get in contact with you.

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