Finance question
Chattel mortgage vs commercial hire purchase?
The core split is ownership and GST timing. A chattel mortgage makes you the owner from settlement and generally lets you claim the GST on the purchase up front. Commercial hire purchase keeps the asset in the lender's name until the final payment, and treats the GST across the term. Both fund the same assets; the right pick depends on your books.
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The short answer
Two ways to finance the same asset
A chattel mortgage and a commercial hire purchase both spread the cost of a vehicle or piece of equipment over a fixed term, and both are secured by the asset itself. Where they differ is who legally owns the asset while you pay it off. A chattel mortgage puts the asset in your name from the start, with the lender registering a mortgage over it. Commercial hire purchase leaves it in the lender's name and transfers title to you at the end.
That difference in ownership drives the tax and GST treatment. Because a chattel mortgage makes you the owner immediately, the GST on the purchase price is usually claimable up front in your next activity statement. Under commercial hire purchase the GST is handled differently and tends to spread across the arrangement. Which one works out better depends on how your business reports and how important early cash relief is.
For many Australian businesses the chattel mortgage has become the default for the up-front GST claim and clean ownership. Commercial hire purchase still has its place, particularly where a business prefers ownership to pass only at the end. The sensible move is to compare both on your actual numbers and let your accountant confirm the treatment before you commit.
Which one suits you?
The factors that decide the better structure.
Your GST reporting
How and when you report changes the benefit of each.
When you want title
Now with a chattel mortgage, or at the end with hire purchase.
Early cash relief
An up-front GST claim can lift working capital sooner.
The asset type
Vehicles, trucks and machinery all work with either.
Why the structure is worth a second look
Ownership timing differs
One gives you title now, the other at the final payment.
GST is treated apart
Up-front on a chattel mortgage, across the term on hire purchase.
We quote both
Across 40+ lenders, side by side, so the comparison is real.
A real example
A cafe owner finances a $45,000 fit-out of kitchen gear. On a chattel mortgage she owns the equipment at settlement and claims the GST on the purchase up front, helping that quarter's cash. On commercial hire purchase the repayments look similar but the GST spreads over the term. Same gear, different timing. Illustrative only.
Common questions
Frequently asked questions
Are they really that different?
The repayments are similar, but ownership timing and GST treatment differ. A chattel mortgage gives you title now with up-front GST; commercial hire purchase transfers title at the end.
Which do most businesses choose?
Many lean toward a chattel mortgage for the up-front GST claim and immediate ownership, but the right choice depends on your reporting and cash needs.
Do both cover the same assets?
Yes. Both fund vehicles, trucks, machinery and other business equipment, secured by the asset itself.
Can you show me both options?
Yes. We quote both structures across 40+ lenders and lay the numbers out so you can decide on your own figures, alongside your accountant.