What Is a Chattel Mortgage and Is It Right for Your Business Vehicle?
Published on 29 Jun 2026
by Andy Iriks
Key takeaways
- A chattel mortgage is business vehicle finance that gives you immediate ownership, with the loan secured against the vehicle.
- It lets businesses claim GST input credits on the vehicle purchase price.
- Interest and depreciation are tax deductible for the business-use portion.
- It requires an ABN and at least 50% business use, and a balloon payment can lower monthly repayments.
If you run a business and need a work vehicle, a chattel mortgage is one of the most common ways to finance it, largely because of the tax features. Andy has been arranging finance since 2000, and he will explain it in plain English and tell you whether it suits your setup, always checking the detail with your accountant where it matters.
What a Chattel Mortgage Is
A chattel mortgage is business vehicle finance providing immediate ownership, with the loan secured against the asset. The chattel is the vehicle. You own it from day one, and the lender holds security over it until the loan is paid out. That immediate ownership is what unlocks the tax treatment.
The Tax Advantages
This is where a chattel mortgage earns its popularity:
- It enables businesses to claim GST input credits on the vehicle purchase price, often a sizeable amount you can claim back.
- Interest and depreciation are tax deductible for the business-use portion of the vehicle, reducing your taxable income.
The exact benefit depends on your situation and how the vehicle is used, so this is always worth confirming with your accountant. But for many businesses, the tax features make a real difference to the true cost.
Who Can Use One
A chattel mortgage requires ABN registration and a minimum 50% business vehicle use. It is built for business, not personal, buyers. It is suitable for sole traders, companies, trusts and partnerships purchasing business vehicles, so most business structures are covered.
The Balloon Payment Option
A balloon payment option reduces your monthly repayments by deferring a final lump sum payment to the end of the term. This frees up cash flow month to month, but you need a plan for that lump sum, refinance it, pay it out, or trade the vehicle in. It is a useful lever, used deliberately.
| Chattel mortgage feature | What it means for you |
|---|---|
| Immediate ownership | The vehicle is yours from day one |
| GST input credit | Claim GST on the purchase price |
| Tax deductions | Interest and depreciation on business use |
| Balloon payment | Lower monthly repayments, lump sum at end |
Is It Right for You?
A chattel mortgage suits a business that wants to own the vehicle and make the most of the tax features. If you would rather not own the asset or your business use is below 50%, other structures may fit better. This is exactly the kind of decision where a broker who looks at your whole position adds value. See the chattel mortgage page, which covers the comparison against a consumer car loan in detail.
How Andy Helps
Andy structures the finance around your business, works with your accountant on the tax side, and compares lenders to get a competitive rate. See the business finance page and get in touch.
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