Chattel Mortgage (CM)
The Chattel Mortgage product, is when a mortgage is placed over goods to be financed. A Chattel Mortgage is classed as a cash sale in that the goods will automatically become your property on purchase and the finance company takes a mortgage over the chattels. You can claim depreciation, running costs and interest paid, against your business income. The chattel mortgage allows your business to claim the full input tax credit from GST incurred expenses immediately (next BAS statement). (refer to your tax advisor or accountant).
A Finance Lease is a commercial finance product, which enables the customer to have the use of various equipment and the benefits of ownership, while the financier retains actual ownership of the various equipment. The financier purchases the equipment on behalf of the customer, who then leases the equipment back from the financier and pays a fixed monthly lease rental for the term of the lease. At the end of the lease the customer can either pay a residual value (final instalment) on the lease and take ownership of the equipment or re-finance the residual and continue to lease.
Operating Lease / Rental
Operating Lease / Rental is an agreement between a financier and a customer whereby the financier will purchase the equipment on behalf of the customer and will then rent it back to them over a predetermined period. The customer simply makes fixed monthly rent payments, and at the end of the Lease / Rental contract either hands back the equipment to the financier (with no more to pay), continues the Lease / Rental agreement or buys the equipment outright at it’s market value.
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