Chattel Mortgage A Unique Financing Facility

Chattel Mortgage A Unique Financing Facility

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A chattel mortgage is a unique car financing facility which allows for instant GST benefits to a purchaser who accounts for GST on a cash basis.

What is a chattel mortgage?

It occurs where a Loans lender provides a loan or Loans facility to a taxpayer and the taxpayer uses that facility to purchase a asset such as a motor vehicle. Unlike hire purchase agreements, under a chattel mortgage a taxpayer becomes the owner of the motor vehicle at the time that the agreement is entered into. Security for this form of car Loans is a mortgage over the vehicle purchased.

How does a chattel mortgage work?

Under a chattel mortgage the Loans provider funds the purchase of the vehicle. The customer takes ownership of the motor vehicle at the time of purchase. The Loans provider then takes a mortgage over the vehicle as security for the car Loans. Once the contract is completed, the mortgage is removed giving the customer clear title to the motor vehicle.

Chattel mortgage features

Low establishment fees and monthly fees, no payout penalties
It range from 1 to 5 years
A tax deduction is available if used for business use
It repayments are fixed for the term
The Interest Rate is fixed for the term of the agreement
No GST is charged on the monthly mortgage payment
Customers registered for GST can claim the GST that is included in the vehicle purchase price

Who does a chattel mortgage suit?

It suits someone who is going to use a motor vehicle predominately for business use, therefore this car financing product is used by companies, trusts, sole traders, partnerships and ABN holders.

Chattel mortgage taxation implications

A cash basis taxpayer for GST purposes is entitled to claim all of the GST input tax credit up to the luxury car tax threshold or depreciation limit of $57,180 in relation to an acquisition using the chattel mortgage product at the commencement of the arrangement. The monthly repayment or balloon amount is not subject to GST. Cash basis taxpayers still retain their rights to claim depreciation and interest on the motor vehicle acquired under a chattel mortgage facility.

Advantages of a Chattel Mortgage
Own the vehicle from the start of the agreement
Access to tax benefits benefits.
Pay no deposit for approved customers and get 100% Loans.
New, Used and Privately sold vehicles can be Loaned.
Loans from $5000-$1,500,000+
Payments can be structured to suit cash flow.

Tax implications

GST can be claimed on the purchase price and credited back to you or your business.

Depreciation can be claimed on the purchase price of the vehicle, machinery or plant and equipment.
The interest content of the loan may be tax deductible.
Running costs and maintenance are also able to be claimed

About the Author:
Yes Loans offers fast and customer focused solution to your car loans and perth home loans needs.



Article Originally Published On: http://www.articlesnatch.com


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