Quick answer: A chattel mortgage is a business finance arrangement where the lender advances the money to buy a vehicle or piece of equipment (the “chattel”), you own the asset from day one, and the lender holds a mortgage over it until the loan is paid out. You make regular repayments — often with a balloon (a lump sum at the end) — and because it’s business finance, you may be able to claim GST on the purchase price and the interest and depreciation at tax time. It’s one of the most popular ways Aussie tradies and ABN holders finance a work ute, truck or machine.
What “chattel mortgage” actually means
“Chattel” is just an old word for a moveable asset — your ute, tipper, excavator or trade equipment. “Mortgage” means the lender registers a security interest over it. Put together: you take ownership of the asset immediately, the lender funds it, and their security is released once the balance is cleared. It’s the business equivalent of a secured car loan, structured for people who use the asset to earn income.
How the money and repayments work
The lender pays for the asset up front. You repay the amount financed plus interest over a set term — usually 1 to 7 years — in weekly, fortnightly or monthly instalments. Two levers change the repayment:
Deposit or trade-in
Putting money down (or trading in an old asset) reduces the amount financed and your repayments. Many tradies finance the full amount to keep cash in the business — both are fine.
Balloon (residual) payment
A balloon is a chunk of the loan parked at the end of the term. A bigger balloon lowers your regular repayments but leaves a lump sum to pay (or refinance) when the term ends. It’s useful for managing cash flow, but you pay interest on that balance the whole way through — so it’s a trade-off, not free money. You can model different balloons on our chattel mortgage calculator.
The tax and GST angle (why businesses like it)
Because a chattel mortgage is business finance and you own the asset, it’s generally treated as a purchase for tax purposes. That typically means you may be able to claim the GST in the purchase price on your next BAS, and claim the interest and depreciation as business deductions — where the asset is used for business. The instant asset write-off may also apply in some years. Tax outcomes depend on your situation and current ATO rules, so confirm the detail with your accountant.
Who a chattel mortgage suits
It’s built for ABN holders and businesses buying an asset used mainly for work — sole-trader tradies, companies, and self-employed operators. If the vehicle is mostly private, a consumer car loan may fit better. Not sure which side of the line you’re on? That’s exactly the kind of thing our team sorts out in a two-minute chat. And while we’re built for tradies, we finance everyone — trade or not.
Chattel mortgage vs the alternatives
Compared with a lease, a chattel mortgage means you own the asset outright from the start rather than renting it — see how a chattel mortgage compares with a lease or hire purchase. Compared with an unsecured business loan, the rate is usually sharper because the asset secures the loan. If you’re weighing options, our brokers can lay the choices side by side against your numbers.
How to get started
Have a rough idea of the asset and price? Run it through the calculator for an indicative repayment, then talk to us for a real figure from our lender panel. We handle chattel mortgages for utes, trucks and equipment every day — see the chattel mortgage page, or explore equipment finance and ABN car finance. Low paperwork? Ask about low-doc options.
Chattel mortgage FAQs
Do I own the asset with a chattel mortgage?
Yes. You own it from day one. The lender simply holds a mortgage (security interest) over it until you finish paying, after which the security is released.
What is a balloon payment on a chattel mortgage?
It’s a lump sum of the loan set aside for the end of the term. It lowers your regular repayments but must be paid or refinanced when the term ends, and you pay interest on it throughout.
Can I claim GST on a chattel mortgage?
If you’re registered for GST and use the asset for business, you can generally claim the GST in the purchase price on your BAS, subject to ATO rules. Confirm with your accountant.
What can I finance with a chattel mortgage?
Work vehicles like utes and trucks, plus plant and equipment such as excavators, trailers and machinery — assets used mainly to earn business income.
Is a chattel mortgage only for tradies?
No. It suits any ABN holder or business buying a work asset. Tradie Finance is built for tradies, but we finance everyone.
This article is general information only and does not constitute credit or financial advice. Tradie Finance operates under Australian Credit Licence 506065 (Five Tees Pty Ltd). Lending is subject to approval, lending criteria, terms, conditions and fees. Tax and GST outcomes depend on your circumstances — consider whether this is appropriate for you and speak with your accountant. Written and reviewed by the Finance Director at Tradie Finance.