Finance question
Hire purchase vs chattel mortgage, what's the difference?
The difference is when you own the asset and when the GST lands. Under a chattel mortgage you own the asset from day one and can claim the GST on the purchase price up front. Under hire purchase the lender holds title until the final payment, and the GST is claimed differently. Your accountant will point to the better fit for your books.
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The short answer
Same repayments, different ownership and GST
Both products let you spread the cost of a vehicle or machine over a fixed term, and from the outside the repayments look almost identical. The real split is legal ownership. A chattel mortgage puts the asset in your name from the start, with the lender holding a mortgage over it until you pay it out. Hire purchase keeps the asset in the lender's name and hands ownership across once the last payment clears.
That ownership timing is what changes the tax treatment. With a chattel mortgage, because you own the asset immediately, the GST on the purchase price is generally claimable up front in your next activity statement. With hire purchase, the arrangement is treated differently, so the GST tends to flow through the term. Neither is automatically better; it depends on how your business reports and manages cash.
In practice most Australian businesses on a cash or accruals basis lean toward a chattel mortgage for the up-front GST benefit and simple ownership. Hire purchase still suits some situations. The point is to choose on your numbers, not on habit, and to confirm the treatment with your accountant before you settle.
Which one suits you?
What to weigh before you pick a structure.
How you report GST
Cash or accruals changes when the GST benefit lands.
Ownership timing
Chattel mortgage owns now; hire purchase owns at the end.
Cash flow priority
An up-front GST claim can free working capital sooner.
The asset itself
Vehicles, trucks and machinery all suit either structure.
Why the choice matters for your books
Ownership is not the same
One puts the asset in your name now, the other at the final payment.
GST timing shifts cash
Claiming the GST up front can matter more than the headline rate.
A broker prices both
We quote each structure across 40+ lenders so you compare like for like.
A real example
A landscaper buys a $60,000 tipper. On a chattel mortgage he owns it from settlement and claims the GST on the purchase in his next BAS, easing cash that quarter. On hire purchase the repayments are similar, but the GST flows differently over the term. Same truck, different books. Illustrative only.
Common questions
Frequently asked questions
Which one lets me own the asset sooner?
A chattel mortgage. You own the asset from settlement, with the lender holding a mortgage until you pay it out. Hire purchase transfers ownership at the final payment.
Which is better for claiming GST?
A chattel mortgage usually allows the GST on the purchase price to be claimed up front, while hire purchase is treated differently. Your accountant should confirm what suits your reporting.
Are the repayments very different?
Not usually. The repayment structure is similar; the meaningful differences are ownership timing and tax treatment, not the monthly cost.
Can Ventas quote both?
Yes. We shop both structures across 40+ lenders and show you the numbers side by side so you can choose on your own figures.