When you first started your business, it was most likely you, a pack of business cards, a phone and a dream.
No matter where you are at in your business building efforts, you should be proud of your achievements!

A lot of small businesses start out lean. Using a personal mobile phone and their own car to drive their business to the next level.

As time goes on – customers and revenue increase, websites get more professional, maybe even a wrap on the car, the personal phone becomes a business account and the personal bank account becomes a business account.

What about business vehicle/s or cars used to conduct business?  A lot of small to medium businesses still finance their cars through personal loans or dealership finance. This is more due to habit than anything and maybe not understanding there are products in the market that are designed for business. Is it the best option?

What is a Chattel Mortgage

It is a weird name, but essentially a Chattel Mortgage is finance for cars used for business purposes.  The word Chattel simply means “a personal possession” and ‘mortgage’ means that the lender of the money to purchase the chattel has a mortgage or title over the property until the loan is repaid.

The lender takes a ‘mortgage’ over the vehicle as security the same way a lender or bank takes security over the car if you financed it through a secured personal loan. It is still your car, but the security is placed over the car in the event of defaulting on repayments. Once the car is paid off, you take full ownership to sell the car or continue to use it for your business.

How is it different from a car loan?

It works the same way as a normal secured car loan but customisable to what you need now and in the future.

Main points


  • Use a chattel mortgage to improve your cash flow
  • If you are registered for GST you may be eligible to claim the input tax credit on your next BAS
  • General tax deductions and depreciation may be available for the business usage

A Chattel Mortgage…

  • Generally has lower rates compared to loans through the bank or dealership
  • Has GST, depreciation, and interest able to be claimed back easily
  • Has flexible terms, residuals, and options to include extras
  • Helps you manage your cash flow by allowing deposits or trade-ins
  • Gets you into business asset finance building a credit rating for your business for future needs to continue to grow your business.

Who can take on a Chattel Mortgage?

Many different entities can take out a Chattel Mortgage on a vehicle if the car is for majority business use.

  • Employees
  • A sole trader
  • Partnerships
  • Companies


What are the main benefits?

The main benefits of having a chattel mortgage include setting a residual or balloon to reduce the monthly payments, the option or potential to claim tax deductions for business use* and claiming input tax credits if you are registered for GST

What about tax and GST?

Most business people would be using their car for business purposes so you may be eligible to claim a tax deduction against your income for the interest charges along with the ATO set depreciation.  Your accountant will be the best person to speak to about what you can claim.

How does the mortgage work?

You own the vehicle, however, the financier will place a mortgage similar to a home over the vehicle as security. Set monthly repayments are made for the term and at the end, the financier will remove the mortgage.  If you have set a residual, you can refinance this reserved amount, sell the car and pay out the residual or use the car as a trade and payout the residual.

Who is it suitable for?

Any business that is registered for GST as you may be able to claim the GST from the vehicle’s purchase price as an Input Tax Credit on the next BAS you complete.


** Always speak to your accountant regarding your eligibility for tax writeoffs or GST matters

Disclaimer: The thoughts and opinions conveyed on this website are those of the author/s and are of a general nature. Any information provided does not constitute financial or general advice to you from Journey Finance Australia.  When considering financial or insurance products, you should seek your own independent advice from a professional.


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