A chattel mortgage is a loan used to buy a vehicle or piece of equipment for your business. You own the asset from day one, the lender takes security over it, and you repay the loan over an agreed term, with or without a balloon at the end.
loan-o is a Brisbane finance broker based in Milton. We arrange chattel mortgages for businesses across South East Queensland and beyond, comparing options from a panel of 50+ bank and non-bank lenders. This guide explains the steps and the trade-offs in plain language so you can ask better questions, whoever you finance with.
How a chattel mortgage works, step by step
- You pick the asset. A work ute, truck, van, machine or other business equipment, from a dealer or a private seller.
- You apply. The lender looks at the asset, your business and trading history, your credit file and the deal you are proposing.
- The lender pays the seller. You take delivery and the asset is registered or recorded in your name or your business name.
- The lender takes security. It registers an interest over the asset, usually on the PPSR (Personal Property Securities Register), until the loan is repaid.
- You make repayments over the term, usually monthly.
- At the end you have paid it off, or you pay any balloon, refinance it or sell the asset. The security is then released.
Who owns the asset
You do, from the time you take delivery. The lender holds a security interest, which means it can take the asset if you do not meet the loan terms, and you may still owe any shortfall after it is sold. This is the main difference from a lease, where the lender owns the asset during the term. See chattel mortgage vs lease for the comparison.
What it can be used for
A chattel mortgage is used for assets bought mainly for business purposes: vehicles, trucks, trailers, machinery and equipment, new or used. Lenders will ask how the asset will be used. For used assets and private sales, expect extra checks such as an inspection, proof of ownership and a PPSR search; our guide to financing a used vehicle or equipment explains them.
Deposit, term and balloon
- Deposit: some lenders finance the full price and others ask for a deposit or trade-in. A deposit lowers what you borrow.
- Term: a longer term lowers the repayment but usually increases the total interest.
- Balloon: a lump sum left owing at the end. It lowers regular repayments, but you still have to pay or refinance it. See what a balloon payment means.
Use the finance calculator to see how the term and balloon change the repayment.
Tax and GST: what to check with your accountant
The tax and GST treatment of a chattel mortgage depends on your business, and your accountant is the right person to confirm it. As a general guide, a GST-registered business may be able to claim the GST on the purchase price, and interest and depreciation may be treated in particular ways. Do not rely on a general guide. Our article on instant asset write-off and equipment finance covers how write-off rules can interact with a purchase.
Costs and risks to look at
- The interest rate and the comparison rate, plus establishment, account and other fees.
- The total you will pay over the term, including any balloon, not just the monthly repayment.
- Early payout fees or break costs if you sell or refinance.
- What happens if you fall behind: the lender can take the asset, and you may still owe a shortfall.
- Insurance requirements on the asset.
Our guide on how to compare the total cost of business finance shows how to put offers side by side.
What to have ready
- The quote or invoice for the asset, and any trade-in.
- Your ABN and how long you have traded.
- Recent business bank statements, BAS if registered for GST, and tax returns or income records.
- Any deposit.
- Details of other finance you already have.
The takeaway
A chattel mortgage gives you ownership from day one and a lender with security over the asset. Whether it suits you depends on the asset, how long you will keep it, your cash flow and your tax position. Compare the total cost, not just the repayment. loan-o can review any offer you already have for free; start a free finance check with no credit check to enquire, or see our equipment finance page.
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Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information in this article is general and does not take into account your personal or business needs. It should not be treated as personal financial, tax, legal or credit advice.
Last reviewed: 21 October 2026. This content provides general information only. It should not be treated as personal financial, tax, legal or credit advice.
Frequently asked questions.
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You choose a vehicle or piece of equipment for your business, and a lender pays the seller. You own the asset from the start and repay the lender over an agreed term, usually with interest. The lender takes security over the asset until the loan is repaid, and it is removed once you have paid it out.
You do, from the time you take delivery. The lender holds a security interest over it, which means it can take the asset if you do not meet the loan terms. Once the loan is repaid, the security is released.
Not always. Some lenders will finance the full price, and others ask for a deposit or a trade-in. It depends on the lender, the asset and your situation, and a deposit can reduce the amount you borrow and the interest you pay.
A balloon is a lump sum left owing at the end of the term. It lowers your regular repayments, but you still have to pay it, refinance it or sell the asset to cover it. It also means you pay interest on a higher balance for longer.
Yes. It is used when the asset is bought mainly for business purposes, and lenders will ask how it will be used. For a vehicle used mostly for personal purposes, other types of finance usually apply.
You can usually pay it out or sell the asset, but check the contract first. There may be early payout fees or break costs, and the lender will need to release its security before ownership passes to a buyer. Ask for a payout figure before you decide.
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