Chattel Mortgage

Financing Through Chattel Mortgage

One of the financing options that you can also maximise is the chattel mortgage option. This option is one of the most popular financing options, and it’s useful for financing commercial vehicles. Under this arrangement, you get access to the vehicle of your choice. After which, you enter into a mortgage agreement with the lender using the vehicle you just purchased. This is to ensure that the lender gains security under the loan arrangement. This option is similar to the secured financing option under loan for personal use.

What Is Chattel Mortgage?

Generally, this option is regarded as one of the most preferred methods in the loaning industry. This is because it offers the borrower ownership of the vehicle from the beginning of the loan arrangement. Under this arrangement, the lender provides the purchase sum to the borrower, who then purchases the vehicle in his name. This ensures that ownership resides with the borrower rather than the lender.

Afterwards, to secure the loan arrangement, the borrower executes a mortgage arrangement in favour of the lender using the vehicle as to the subject of the agreement. As expected, this allows you to finance as much as the total cost price under the loan arrangement. All you need to do is apply to a lender and receive the loan amount once you’re successful.

Once the agreement comes to life, you’ll need to make regular repayment throughout the loan arrangement. This option comes with flexible terms that allow you to spread your repayment over five years. This way, you enjoy flexible repayment. Then, as soon as you’re done with the repayment, the mortgage charge over the vehicle comes to an end. In turn, you enjoy unencumbered ownership of the vehicle once more.

This option comes with a wide range of benefits that makes it desirable. One of them is that this option allows the borrower to claim the GST upfront. The borrower will have to settle for the absence of GST on other regular payments that they will make to discharge the loan obligation.

Another benefit of this arrangement is that you get ownership of the car from the beginning of the arrangement. The mortgage agreement merely creates a charge over the vehicle. It does not in any way affect your ownership of the vehicle. As an extension to this, you can easily claim depreciation for this vehicle when you record it as an asset.

This option also ensures that you are responsible for determining the vehicle’s residual value under the loan arrangement. This option also allows you to enjoy a competitive interest rate. Usually, the rates associated with this arrangement are lower. This is because this arrangement provides security for the loan arrangement to the lender.

In case you find this option interesting for your vehicle purchase, you can contact us to enjoy the benefits it provides. We will ensure that you get access to the most financially convenient means of realising your goals.

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