Compare finance types
Chattel mortgage vs Equipment loan: which is right for your business?
The main difference between a chattel mortgage and a equipment loan is how they are secured and repaid: a chattel mortgage suits businesses buying vehicles or equipment they want to own and depreciate, while a equipment loan suits any business buying income-producing equipment.
Chattel mortgage vs Equipment loan at a glance
| Chattel mortgage | Equipment loan | |
|---|---|---|
| What it is | A chattel mortgage is equipment or vehicle finance where your business owns the asset from purchase and the lender holds a mortgage over it as security until the loan is repaid. It is the most common structure for business vehicles, machinery and plant in Australia. | An equipment loan is a secured business loan used to buy machinery, vehicles or technology, with the equipment itself as security and fixed repayments over 1 to 7 years. It covers new and used assets from dealers or private sellers. |
| Amount | $10,000 – $2,000,000 | $5,000 – $5,000,000 |
| Term | 12–84 months | 12–84 months |
| Indicative rate | 6.9% – 14.5% p.a. | 6.9% – 16% p.a. |
| Rate type | Fixed | Fixed |
| Security | Secured by the asset | Secured by the asset |
| Repayments | Monthly (weekly or fortnightly available) | Monthly |
| Typical speed | 24–48 hours for low-doc up to $150k; longer for full-doc | Same day to 48 hours for low-doc |
| Best for | Businesses buying vehicles or equipment they want to own and depreciate | Any business buying income-producing equipment |
| Consider the other if | Assets you plan to return or upgrade every couple of years | General working capital with no asset purchase |
| Tax | Interest and depreciation are generally deductible and GST may be claimable upfront. Confirm with your accountant. | Interest and depreciation are generally deductible. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a chattel mortgage
A chattel mortgage is usually the better fit for businesses buying vehicles or equipment they want to own and depreciate. Its main advantages are lower rates than unsecured lending, gst on the price usually claimable upfront, balloon option lowers repayments. Consider the alternative if assets you plan to return or upgrade every couple of years.
When to choose a equipment loan
A equipment loan is usually the better fit for any business buying income-producing equipment. Its main advantages are secured pricing, low-doc pathways for established businesses, new, used and private-sale assets. Consider the alternative if general working capital with no asset purchase.
Chattel mortgage
A chattel mortgage is equipment or vehicle finance where your business owns the asset from purchase and the lender holds a mortgage over it as security until the loan is repaid. It is the most common structure for business vehicles, machinery and plant in Australia.
Equipment loan
An equipment loan is a secured business loan used to buy machinery, vehicles or technology, with the equipment itself as security and fixed repayments over 1 to 7 years. It covers new and used assets from dealers or private sellers.