Chattel Mortgage Rates Australia
We’ll help you compare chattel mortgage interest rates from dozens of lenders. It’s free to compare, with no credit score impact.
$50000
Find my rates
How Lend helps you compare chattel mortgage rates
Choice of lenders
We can a wide range of lenders’ chattel mortgage rates, allowing you to compare your option in a fraction of the time it would otherwise take.
Chattel mortgage interest rates in Australia
Chattel mortgage interest rates in Australia are fixed and typically start from between 7% - 20% p.a. The rate applied to your loan will depend on your business risk profile and the type of asset (vehicle or equipment) you want to finance.
If you’re comparing chattel mortgage rates, here are some factors to consider:
- Chattel mortgage interest rates are lower than unsecured finance rates.
- The lowest rates are typically offered to established businesses with a good credit record and stable income.
- Chattel mortgage rates are lower for brand-new vehicles and machinery and higher on used vehicles and secondhand machinery.
- If your chattel mortgage has break fees, a lower rate could still end up costing you more versus a loan with a higher rate that you can pay off early without penalty.
Compare chattel mortgage interest rates in Australia
To compare interest rates on a chattel mortgage, you’ll need to look at the advertised rate any additional fees to determine the true comparison rate on the loan.
Why is it important? The lowest advertised rate may not be the cheapest once fees are added into your loan cost calculation. In fact, a higher-rate loan with no fees can sometimes be a better deal overall. Here’s a prime example of this below.
Chattel mortgage 1 | Chattel mortgage 2 | |
|---|---|---|
Loan amount | $50,000 | $50,000 |
Advertised rate (fixed) | 7.50% p.a. | 8.00% p.a. |
Establishment fee | $950 | $250 |
Monthly fees | $10 | $0 |
Loan term | 5 years | 5 years |
Monthly repayment | $1,031 | $1,019 |
Total cost of the loan (including fees and interest) | $11,856 | $11,133 |
Money saved | - | $723 |
Which chattel mortgage is best? Well, chattel mortgage 2 is cheaper overall despite having a higher advertised rate than Chattel mortgage 1. That’s simply down to the lower upfront and monthly fees.
How to get the best interest rate on your chattel mortgage
The most effective way to get the best interest rate on a chattel mortgage is simply to shop around. The temptation may be to go with a bank you already have a relationship with. But throwing the next wider will mean accessing a greater range of rates to compare.
For example, non-bank lenders and specialist asset finance providers often offer very competitive chattel mortgage rates. The online application process is usually very fast and simple with these lenders and simpler, sometimes with same-day approval.
Aside from choosing the right lender, the best chattel mortgage interest rates are offered on brand-new vehicles, and to businesses with a good credit score and steady income (a prerequisite for repaying any loan). Remember that you pay less interest on a shorter loan term, which could be worth it if your business can afford it.
More on chattel mortgage interest rates
FAQs
A balloon payment (the lump sum due at the end of the loan term) doesn’t reduce the interest rate on your chattel mortgage. In fact, some lenders may charge a higher rate if you opt for a higher balloon amount.
What the balloon does do, however, is reduce your scheduled repayments in exchange for a larger final payment at the end of the loan term (that’s the balloon).
A balloon payment complicated the interest calculation on a chattel mortgage but a good rule of thumb is that the high the balloon payment, the more expensive the loan will be. This is simply because you are paying off less of the loan during the loan term, meaning there is a higher balance that interest is being charged on.
The interest rate on a chattel mortgage is simply what the lender charges you for borrowing. Chattel mortgage interest rates are usually fixed between 6%-20% p.a. Rates will vary depending on the type of asset you want to finance and whether that asset is brand-new or previously owned.
Chattel mortgage interest rates are usually fixed over the entire loan term, meaning fixed repayments. This can be useful for businesses as it means certainty over your costs and the impact of the loan on your cashflow.
Yes, you can claim the interest payments on your chattel mortgage as a tax deduction. You can also claim GST on the initial asset purchase price as an Input Tax Credit, and the asset’s depreciation as a deduction on your annual tax return.
Remember, though, that any tax deductions or credits only apply to the business use of the asset. Speak to your tax accountant to understand how this works.
The advertised rate on a chattel mortgage does not always accurately reflect how much a loan will cost you. There are two reasons for this:
- The advertised interest rate does not reflect the impact of fees.
- Some lenders advertised a ‘from’ rate meaning they show the lowest possible rate, but decide on a case-by-case basis what each borrower will pay. The low advertised rate is generally only available for businesses with a well-established trading history, strong and stable revenue, and a perfect credit rating. Businesses who are not in such a strong position may pay considerably high rates.
Yes, interest rates are typically higher on a chattel mortgage for bad credit borrowers. Bad credit business loans tend to be much riskier for lenders and they charge higher rates to account for this.
If your business has a poor credit history, expect to pay at least twice what a good-credit business would pay.