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Chattel mortgages: the business car loan with benefits

Savvy CEO Bill Tsouvalas shares why a tax-friendly chattel mortgage is a smart choice for many business owners.

Chattel mortgages

A chattel mortgage could be the answer to your business’s automotive buying dreams. Structured similarly to a regular mortgage, it is a loan product created specifically for commercial car purchases. It’s made up of the ‘chattel’ – the vehicle – and the ‘mortgage’ – the loan. And, even better, it’s ripe with benefits.

“The main benefit of a chattel mortgage is the tax breaks,” says Savvy CEO Bill Tsouvalas. “A business can claim the GST back, interest paid and depreciation of the vehicle. They can also claim the fuel input tax credit. It is by far the best car loan option for businesses.”

The reason for this is simple – since a chattel mortgage is ultimately a business transaction, depreciation and other benefits reserved for business customers can be claimed at tax time. This gives it significant financial advantages over taking out a consumer car loan.

“The main benefit of a chattel mortgage is the tax breaks. It is by far the best car loan option for businesses.” – Bill Tsouvalas, CEO, Savvy

In fact, the main difference between a consumer car loan and a chattel mortgage is that with the latter, the financier secures the loan using the vehicle intended for purchase. Then the buyer takes ownership of the car upon purchase – once the loan is paid off, the mortgage is removed.

And the advantages don’t stop there. A chattel mortgage also benefits a business with its flexibility. “With a chattel mortgage, a business can amortise insurance and other on-road costs by financing more than the value of the vehicle,” he explains. “It can also opt for longer or shorter terms, a built-in balloon payment and seasonal repayments if they have seasonal cashflow.”

Even more, lenders may be prepared to finance 100 per cent of the vehicle’s value, meaning the business won’t have to spend its own capital or tie up cashflow. And mortgage interest rates get fixed for the lifetime of the loan, with repayment terms running between one and seven years.

Savvy CEO Bill Tsouvalas
Savvy CEO Bill Tsouvalas

Savvy CEO Bill Tsouvalas’s top tips for financing a business vehicle:

Always check your financial position and credit history

It’s important to do a full check-up, looking beyond your personal credit history to the one recorded against your ABN too.

Do your homework

Look at comparison rates, not just interest rates.

Employ a specialist

See a business-oriented broker to help you sift through the best packages and products.

While a great option for many, a chattel mortgage still isn’t for everyone. “Solo traders who may have difficulty proving they are using their vehicle for 50 per cent or more for business should consider a consumer car loan,” Bill advises. “However, tradies and other solo businesses that have ample proof of business use can easily get a chattel mortgage and make it work.”

Like with any major business decision, it’s important to do some homework before diving in. “I think it’s fundamental that businesses of all types are educated and informed about their choices around funding and finance,” he says.

Over the years, Savvy has helped hundreds of businesses secure the best chattel mortgages tailored to their needs. With flexible repayments, low interest rates, quick approvals and more, the trusted financial partner knows all the ins and outs of chattel mortgages.

“We’ve been doing this for more than a decade and have the experience and the technology to help businesses get the funding they need for their vehicles at competitive rates,” Bill explains. “We put their business in constant contact with a dedicated loan consultant who helps them through the process and the life of the loan. We’re a business’s best friend when it comes to vehicles, as we can find competitive rates on insurance as well.”

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