What is it?

Sometimes known as 'vehicle and equipment loan' Asset and Equipment Finance is a type of credit that is used to purchase a piece of equipment or asset for the purpose of own use (eg, a car loan, purchase of a computer, and more).

While asset and equipment finance loans can be hire purchase and lease agreements, they are usually secured loans such as chattel mortgages. Unlike a mortgage, where the finance is secured against the property, asset, and equipment finance is secured against the asset/equipment that is being purchased.

How do Chattel Mortgages Work?

Chattel mortgages differ from other types of asset finance in several ways. Hire purchases involve renting a car or equipment from a lender, and repaying in installments to ultimately purchase the car or equipment.

With a financial lease, the financier owns the vehicle or equipment. The borrower is then given the opportunity to buy it for an additional price. In a chattel mortgage, once the loan is completely paid off, the borrower owns the vehicle or equipment outright.

Benefits of a Chattel Mortgage

• Interest rates are typically lower than an unsecured loan.
• Interest rates are typically lower than an unsecured loan.
• You (your business) can claim tax deductions.
• Repayments can be structured over a range of terms.