| Chattel Mortgage
Chattel Mortgage is a secured loan where the lender takes security over the goods being financed.
Overview
Reason for Popularity
Pricing
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Overview
Chattel Mortgage finance is a means of raising finance to acquire and asset usually for business purposes. It is effectively a secured loan where the lender takes security over the goods being financed. The goods being financed are referred to as the Chattel or Chattels and the lender takes a mortgage over the chattels as security for the loan. The loan is therefore called a Chattel Mortgage loan.
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Reason for Popularity
These loans have become popular since the introduction of the Goods and Services Tax (GST) as it allows a GST registered purchaser to claim back the GST in the asset cost in a lump sum rather than over the term of the contract. This is irrespective of the accounting method used by the purchaser (cash or accrual). With Commercial Hire Purchase finance, if the purchaser accounts on the cash method they can only recoup the GST in the purchase price over the term of the loan.
Clearly, this can be very important as highlighted in the case of a $100,000 truck purchase with a GST component of $9,091. Being able to recoup the $9,091 into the business cash flow can certainly help with the acquisition expenses such as insurance & related costs.
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Pricing
The interest rates charged for Chattel Mortgage finance is the same as for Commercial Hire Purchase (CHP). These rates can be found in the calculator box below. The main difference is in the related costs and stamp duty. Lenders usually charge an up front documentation fee of approximately $380. This is because the documentation is somewhat more involved than for lease and CHP finance. Secondly, the stamp duty charged on the contract is payable up front in a lump sump and is based on the amount financed. For example, if an asset is financed for $100,000, the up front stamp duty in NSW is charged at $5 for the first $16,000 plus $4 per thousand thereafter. Total stamp duty is therefore approximately $341. If you financed the $100,000 on CHP over 60 months with a 20% balloon at the end at a rate of 7%, total stamp duty over the term of the contract would be $761. Clearly in this instance Chattel Mortgage stamp duty is cheaper, but it must be paid up front. Most lenders however will allow borrowers to include the documentation fee and the stamp duty in the amount financed so that these amounts don't need to be paid up front by the borrower.
The upshot of all of this is that overall, Chattel Mortgage finance is relatively no more expensive than Commercial Hire Purchase finance.
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Quotation Calculator
To obtain a quotation, input the selected term and Balloon (amount owing at the end of the term) from the following chart
Standard Terms |
24 Months |
36 Months |
48 Months |
60 Months |
Standard Balloons |
0-60% |
0-50% |
0-45% |
0-35% |
The quotes are for vehicles new and up to four (4) years old.
Input the amount to be financed, the required term, and the balloon amount.
The current interest rate will appear which is an estimate of the rates available through Robert Mayor & Associates Pty Ltd. Final pricing is subject to the lenders criteria & assessment of each proposal. The monthly repayment will be calculated. If you wish, you can override the automatic interest rate by inputting your own figure which will adjust the repayment accordingly.
In order for the calculator below to function correctly, you should be using either Netscape Navigator version 2.02 or higher, or Microsoft Internet Explorer version 3 or higher.
To operate the following quotation calculator enter the appropriate amounts in each input field. Once you have entered a figure in the first input field you may use the tab key to advance to the next input field. Once all of the input fields are filled, to generate the final monthly repayment figure, press inside the monthly repayment field with your cursor.
The interest rate will be automatically generated which is an estimate of the current interest rate available through Robert Mayor & Associates. Final pricing is subject to the lenders criteria and assessment of each proposal.
Note: Amounts Financed less than $7,500 are not available.
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Contact Us for More Information
If you would like to find out more information about anything covered on this page, please contact us and we will assist you with your enquiry. Thank you.
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