A chattel mortgage could be the answer to your business dreams of buying cars. Structured similarly to a regular mortgage loan, it is a loan product created specifically for the purchase of commercial cars. It is made up of the “movable property” – the vehicle – and the “mortgage” – the loan. And, best of all, it’s packed with benefits.
“The main benefit of a movable mortgage is the tax breaks,” says Savvy CEO Bill Tsouvalas. “A business can claim the GST rebate, interest paid and depreciation on the vehicle. They can also claim the fuel input tax credit. It is by far the best car loan option for companies.
The reason is simple: Since a movable mortgage is ultimately a business transaction, depreciation and other benefits reserved for business customers can be claimed at tax time. This gives it significant financial advantages compared to taking out a consumer car loan.
“The main advantage of a movable mortgage is tax relief. This is by far the best auto loan option for businesses. – Bill Tsouvalas, CEO, Savvy
Indeed, the main difference between a consumer car loan and a mortgage is that with the latter, the financier secures the loan using the vehicle intended for the purchase. Then the buyer becomes the owner of the car at the time of purchase – once the loan is paid off, the mortgage is canceled.
And the benefits don’t end there. A movable mortgage also benefits a business thanks to its flexibility. “With a chattel mortgage, a business can amortize insurance costs and other costs down the road by financing more than the value of the vehicle,” he explains. “He can also opt for shorter or longer terms, a built-in lump sum payment and seasonal refunds if they have seasonal liquidity.”
Plus, lenders may be prepared to finance 100% of the vehicle’s value, meaning the business won’t have to spend its own capital or tie up cash. And mortgage interest rates are fixed throughout the life of the loan, with repayment terms ranging from one to seven years.
Top tips from Savvy CEO Bill Tsouvalas for financing a business vehicle:
Always check your financial situation and credit history
It is important to take a full balance sheet, going beyond your personal credit history to that recorded against your ABN as well.
Do your homework
Look at the comparison rates, not just the interest rates.
Employ a specialist
Consult with a business-focused broker to help you sift through the best packages and products.
Although it is a great option for many, a chattel mortgage is still not for everyone. “Individual traders who may have difficulty proving that they are using their vehicle 50% or more for business purposes should consider a consumer auto loan,” advises Bill. “However, businesses and other sole proprietorships that have a lot of evidence of commercial use can easily get a chattel mortgage and make it work.”
As with any major business decision, it’s important to do your homework before you get started. “I think it’s fundamental that businesses of all types are educated and informed about their financing choices,” he says.
Over the years, advised has helped hundreds of businesses obtain the best chattel mortgages for their needs. With flexible repayments, low interest rates, quick approvals, and more, the trusted financial partner knows all the ins and outs of mortgages.
“We’ve been doing this for over a decade and have the experience and technology to help companies get the financing they need for their vehicles at competitive rates,” says Bill. “We put their business in constant contact with a dedicated credit counselor who accompanies them throughout the process and throughout the life of the loan. We are a company’s best friend when it comes to vehicles because we can also find competitive rates on insurance.