Finance Basics - 5 min read
Chattel mortgage or lease? Here’s how we think about it.
Introduction
No jargon, no spin, just our honest take. One of the most common questions we get from business clients is whether to go chattel mortgage or lease on a vehicle or piece of equipment. The honest answer is: it depends on your situation. But here’s how we walk through it with clients. on the things that matter to South Australian business owners and individuals navigating the finance landscape.
The Key Difference
With a chattel mortgage, you own the asset from day one. The finance is secured against it, you can claim depreciation and the interest component, and at the end of the term it’s yours. With a lease, you’re using the asset for a set period. Payments are typically lower, but ownership only transfers if you pay a residual at the end.
When We'd Lean Chattel Mortgage
If the asset will hold value, if you want long-term ownership, or if your accountant has confirmed that depreciation benefits outweigh the lease structure, chattel mortgage is usually the better fit. It also tends to work well for GST-registered businesses with strong, consistent cash flow.
When We'd Lean Lease
If preserving cash flow is the priority right now, if you want flexibility at the end of the term, or if you’re in an industry where equipment becomes obsolete quickly, a lease can make more sense. Lower monthly commitments free up capital for other parts of the business.
Our Advise
Talk to your accountant first, then talk to us. The right fit depends on your tax position, your cash flow, and what you plan to do with the asset long-term. We’re happy to work through the numbers together and make sure the finance complements whatever decision you land on.