Quick answer
A chattel mortgage is a finance structure where you (the business) take legal ownership of the asset on day one, and the lender registers a security interest over it on the Personal Property Securities Register (PPSR). You pay regular instalments over the agreed term, claim depreciation and the interest portion of each payment, and you can claim the full GST on the asset cost upfront in your next return. Indicative NZ chattel mortgage rates run similar to hire purchase, from around 7.6% p.a. for prime borrowers.
Who it suits
- You are GST registered and want to claim GST on the asset cost upfront
- You want ownership from day one (not at the end like hire purchase)
- You want to claim depreciation and interest deductions
- You want a fixed-rate, fixed-term repayment schedule
Pros
- · You own the asset from day one — it sits on your balance sheet immediately
- · Claim full GST on the asset cost in the period of purchase (subject to GST basis)
- · Claim depreciation and the interest portion of repayments
- · Fixed rate, fixed payments — easy to budget
- · Lender registers PPSR security; otherwise unencumbered by lender ownership
Cons
- · You bear depreciation risk over the term
- · Sale before end-of-term requires paying out the loan first
- · Asset and liability both on balance sheet — increases gearing optics
- · Early termination fees may apply
At a glance
| Ownership from day one | You (business) |
| Lender security | PPSR security interest |
| Balance sheet treatment | On balance sheet (fixed asset + liability) |
| Who claims depreciation | You |
| Who claims interest | You (interest portion of each payment) |
| GST treatment | Claim full GST on asset cost upfront (cash/invoice basis) |
| Typical term | 24–60 months |
| Deposit | 0–20% (subject to credit + asset type) |
| Indicative rates | From ~7.6% p.a. (subject to credit) |
| Balloon / residual | Optional balloon to reduce monthly repayments |
Indicative rates only. Subject to lender credit assessment, asset type and prevailing market.
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