Chattel Mortgage vs. Finance Lease: A Plain-English Guide for Gold Coast Businesses

Your Gold Coast business needs a new vehicle or piece of equipment to grow. You know you need finance, but which type is right for you? The two most popular options are a Chattel Mortgage and a Finance Lease, and choosing the right one can have a big impact on your cash flow and tax position.

This simple guide breaks down the difference to help you decide.

• Disclaimer: The right structure depends on your specific business and tax situation. We always recommend you discuss these options with your qualified accountant. Our job is to explain the products and then secure you the best deal on the one you choose.

The Chattel Mortgage: The "Ownership & GST Boost" Option

A Chattel Mortgage is the most common way businesses in Australia finance assets.

• How it works: We secure a loan for you to buy the asset (vehicle or equipment). Your business owns the asset from day one, and the lender simply holds a 'mortgage' over it as security until the loan is paid off.
• The Big Benefit: If your business is registered for GST, you can typically claim the entire GST amount from the asset's purchase price on your next Business Activity Statement (BAS). This provides a significant, immediate cash flow boost for your business.
• Best For: Businesses that want to own their assets for the long term and can benefit from the upfront GST claim and ongoing depreciation deductions.

The Finance Lease: The "Lower Payments & Flexibility" Option

A Finance Lease works more like a long-term rental agreement.

• How it works: The lender purchases the asset on your behalf, and your business then leases it from them for a fixed monthly payment over an agreed term. The lender owns the asset during the lease period.
• The Big Benefit: Your monthly payments are often lower than a Chattel Mortgage, and because you're 'renting' the asset, the rental payments are typically treated as an operating expense and are 100% tax-deductible.
• Best For: Businesses that want to preserve their capital with 100% financing, have predictable fixed costs, and like to upgrade their equipment every few years at the end of the lease term.

At a Glance: Chattel Mortgage vs. Finance Lease

FeatureChattel MortgageFinance LeaseOwnershipYou own it from Day 1The lender owns it during the leaseGST BenefitClaim full GST upfront on your next BASGST is claimed on each monthly rental paymentTax DeductionClaim depreciation & loan interestClaim the full rental paymentBest ForLong-term ownership & a big GST cash boostLower payments & regular equipment upgrades

The Right Choice for Your Business

There is no single 'best' option; there's only the best option for your business. The key is getting expert advice. Talk to your accountant about the best structure for your tax situation, and then talk to us. We'll find you the most competitive deal on the market for your chosen finance solution.

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