Australian companies looking to purchase their commercial vehicles using a car finance broker have found chattel mortgages to be one of the most practicable solutions because of the benefits and versatile options on offer.
What is a chattel mortgage?
A chattel mortgage is, simply explained, when a business owner asks a lender (usually a bank) for financing to purchase a vehicle, or in most cases, a fleet of vehicles.
Let’s break up the two words here:
Think of the chattel as the asset – in this case, “the vehicle” that the business wants to purchase. The financier will lend money to your business in order for you to purchase the vehicle/s from the dealership.
This is self-explanatory. Your mortgage is the arrangement you have made with the lender regarding your monthly repayment instalments.
Put the words together and you have it simply explained: vehicle loan instalment.
Why do businesses prefer chattel mortgages?
- Chattel mortgages offer a significantly lower interest rate compared to unsecured-type loans. This lower rate is due to the low-risk factor the financier has in the mortgage agreement.
- One of the foremost benefits, however, is that businesses who make use of chattel mortgages can claim all the interest paid over the lifespan of the loan agreement from their tax returns. Moreover, it is usually the financier who applies for this type of claim and will then refund the business.
For businesses looking for the best vehicle finance lending solution that makes meets their individual requirements, a chattel mortgage could be the perfect option.
If you’d like more information about a chattel mortgage, contact Simply Finance today by calling 1300 115 263.