Finance question
Chattel mortgage vs novated lease for a work car?
They suit different people. A chattel mortgage is for the business or sole trader that owns the car and uses it for work, with the business holding the asset and the finance. A novated lease is an arrangement between an employee, their employer and a financier, paid from the employee's salary. If you run your own ABN and the car is a work vehicle, a chattel mortgage is usually the relevant one.
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The short answer
One is for your business, the other for an employee
A chattel mortgage is business finance. The business or sole trader buys the car, owns it from day one and holds the loan, with the lender taking security over the vehicle until it is paid out. It is the standard structure for a work car bought under an ABN, from a real estate agent's sedan to a mobile technician's wagon.
A novated lease is an employment arrangement. It ties three parties together, the employee, their employer and a financier, and the repayments come out of the employee's salary package. It only exists where there is an employer willing to run it through payroll, so it does not apply to a sole trader financing their own vehicle.
The tax and packaging side of each differs and belongs with your accountant, especially around GST and how the vehicle is used. What we handle is the chattel mortgage side for business owners, across 40+ lenders, up to $500,000 and often with no financials, so a work car can be sorted quickly.
Do you qualify?
Which structure fits you.
You have an ABN
A chattel mortgage suits business owners and sole traders directly.
A work vehicle
The car is used in the business, not purely private.
You want to own it
A chattel mortgage leaves the vehicle yours at payout.
Your accountant confirms
GST and deductions differ between the two, so check your setup.
Why the two rarely compete
Different owners
A chattel mortgage sits with your business; a novated lease sits with an employee's salary.
Employer or not
No employer to run payroll means a novated lease is not on the table.
Ownership at the end
A chattel mortgage leaves you owning the car; a lease may not.
A real example
A self-employed real estate agent wants a $48,000 SUV for client work. With no employer to package a novated lease, a chattel mortgage is the fit. The business owns the car, the loan is secured on it, and she owns it outright once the term ends. Illustrative only.
Common questions
Frequently asked questions
Can a sole trader use a novated lease?
Generally no. A novated lease needs an employer to run it through payroll, so a sole trader financing their own car uses a chattel mortgage instead.
Do I own the car with a chattel mortgage?
Yes. Your business owns it from the start, with the lender holding security, and it is fully yours once the loan is paid out.
Which is better for tax?
It depends on employment, GST registration and how the car is used. Your accountant should confirm the right treatment for you.
Can I finance a used car with a chattel mortgage?
Yes. Used work vehicles are financeable, with age and condition shaping the term and any deposit.