Financing your vehicle purchase by taking a mortgage over the asset as security for the term of the lease.
A Chattel Mortgage is one of the more common types of finance and is simply where a lender will loan you money to purchase an asset in your name, taking a mortgage over the asset as security.
Different to a lease, the asset is in your name and you can depreciate the asset. Any residual value may be set, even zero. Additionally, from the outset, you can immediately claim back the GST on the purchase price. There is no GST on the regular payments.
While the full amount of the asset can be financed, normally the EX GST price is financed (with you paying the initial GST) as the purchase GST can be claimed back on your BAS.
No maintenance is included in chattels and, once the contract finalises upon you paying the residual if applicable, the mortgage is removed from the asset, which you will then own unencumbered.
- Client can claim the GST component up front
- Residual is controlled by the client
- Client is responsible for residual risk
- Can claim the depreciation
- Own the car in the end