A chattel mortgage is the most popular business finance structure for trailer purchases. Own the trailer from day one, claim GST upfront, and deduct interest and depreciation through your tax return.
A chattel mortgage is a business loan for buying a trailer, where you own the trailer from the start and the lender registers a security interest over it on the PPSR. Once the loan, and any balloon, is paid off, the security is removed and the trailer is yours outright.
It's popular because of how it works for GST-registered businesses. You can usually claim the GST on the purchase price in your next BAS, and the interest and depreciation are generally deductible. A balloon can lower your regular repayments. It suits businesses that plan to keep the trailer for most of its working life.
Tip: ask your accountant how you account for GST before you buy, because it affects when you can claim the GST credit. Then tell your broker so the loan is set up as a chattel mortgage from the start.
Helpful guides: Chattel Mortgage vs Finance Lease for Trailer Finance · Trailer Finance Tax Deductions and GST: What Businesses Can Claim · Balloon Payments in Trailer Finance: Pros and Cons
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