Educational
What Is Chattel Mortgage and How Does It Work for EV Buyers?
If you are buying an electric vehicle through your business, you have probably come across the term chattel mortgage. It is one of the most common finance structures for business asset purchases in Australia, but it is not always well explained.
Here is a plain-English breakdown of what it is, how it works, and why it might be a good fit if you are buying an EV for business use.
What is a chattel mortgage?
A chattel mortgage is a type of business loan where the lender provides the funds to buy an asset (in this case, an EV) and the asset itself acts as security for the loan. You take ownership of the vehicle from day one and make regular repayments over an agreed term.
The word "chattel" just means a movable asset, as opposed to property. And "mortgage" means the lender has a registered interest in the asset until the loan is paid off. Once you have made all your repayments, the lender's interest is removed and you own the vehicle free and clear.
Buying your first EV can feel like a lot of new numbers. You do not have to work it out alone.
We connect you with someone who can explain repayments, balloon options and what paperwork usually looks like.
How does it work in practice?
The process is fairly simple:
You choose the EV you want to buy. Your broker arranges the finance through a lender on their panel. The lender pays the seller, and you drive away with the vehicle. You then make regular repayments (usually monthly) over a set term, typically between one and seven years. At the end of the term, or once the final payment is made (including any balloon or residual payment), the vehicle is yours outright.
One key feature of a chattel mortgage is the option to set a balloon payment, which is a lump sum due at the end of the loan term. This reduces your regular repayments during the loan but means you need to pay a larger amount at the end, or refinance it. Your broker can help you decide whether a balloon makes sense for your cash flow.
What are the potential tax benefits?
This is where chattel mortgages get interesting for business buyers. Because you own the asset from day one, you may be able to:
- Claim the GST on the purchase price upfront (if registered for GST).
- Claim depreciation on the vehicle over its useful life.
- Claim the interest component of your repayments as a business expense.
These benefits can make a meaningful difference to the effective cost of the vehicle. However, tax is complex and personal to your situation, so always speak with your accountant before making decisions based on potential tax outcomes.
It is also worth noting that the Australian Government's electric vehicle discount, which removed fringe benefits tax on eligible EVs below the luxury car tax threshold for fuel-efficient vehicles, has made EVs even more attractive for business use under structures like chattel mortgage. Check with your accountant for current eligibility.
Is chattel mortgage only for businesses?
Yes. Chattel mortgage is a business finance product. You will need an ABN and generally need to be registered for GST to get the full benefit of this structure. If you are buying an EV for personal use, a secured consumer loan is the more common option.
Found an EV that fits your budget? The finance path needs to fit too.
We help you compare the main options for the vehicle you are considering — personal, business and novated where it applies.
Specialist EV finance brokers.
If you are a sole trader or small business owner and want to understand your options more broadly, our guide on EV finance for small business owners is worth a read.
How is chattel mortgage different from a finance lease?
The main difference is ownership. With a chattel mortgage, you own the vehicle from day one. With a finance lease, the lender owns it and leases it to you. At the end of a finance lease, you typically pay a residual amount to take ownership or hand it back.
Both structures have their advantages. A broker can help you compare them side by side based on your tax situation, cash flow, and how long you plan to keep the vehicle.
For a broader comparison of finance types, visit Aussie Finance Hub.
Shopping under $50k often means trade-offs on range and spec — your loan term should match those trade-offs.
A broker can help you avoid a mismatch between how long you keep the car and how the loan is structured.
Is a chattel mortgage right for your EV purchase?
It depends on your circumstances. Chattel mortgage tends to suit business buyers who want ownership from day one, want to claim GST and depreciation, are comfortable with a fixed repayment schedule, and prefer a straightforward structure without the complexity of a lease.
If you are not sure, that is exactly what our broker team is here for. They will take the time to understand your situation and help you work out which structure makes the most sense.
If you are also looking at financing a car alongside your EV, car finance options are available through the same broker team.