A Chattel Mortgage is essentially a mortgage over goods to be financed. Title to the goods passes to you on purchase – and the finance company takes a mortgage over them.
For tax purposes, you can claim depreciation, and interest paid against your business income. If you use the cash method for GST, financing under a Chattel Mortgage allows you to claim the full input tax credit for GST paid on the goods in your next BAS statement.
The Chattel Mortgage is a very flexible finance option. You can either finance the full purchase price or include an up-front deposit or trade-in to reduce your repayments. A balloon payment may also be placed at the end of the term – much like a lease residual – to reduce the monthly repayments.
You can also choose to structure your repayments to clear the debt in full over the term of the agreement.