You might have
heard of chattel mortgage before as it is one of the loan options for car
financing, especially for car leasing in Melbourne or in any part of Australia.
Car buyers opt for chattel mortgage when they are a bit short on the amount
they have to pay to own the car, or when they choose not to pay lump sum cash.
In other parts of
the globe, a chattel mortgage is a loan arrangement particularly targeted for
chattels or movable properties, in which the home is not financed with the
land. In Australia, meanwhile, chattel mortgage basically works the same way,
where the purchase of the car is financed by the lender. In return, you, the
buyer, are expected to pay mortgage or liens on the vehicle, which had been
placed by the lender while giving you full use of the car. Should you fail to
place payments within the agreed period of time, the lender has the right to
repossess the vehicle which serves as the collateral for the agreement.
People planning to
purchase a vehicle for their business are more likely to use chattel mortgage
to pay for it, since the payments made to it are tax-deductible. Interest rates are also generally lower than
other financing options. You will need a lot of diligence in your payments, however,
for chattel mortgages have a usual term of 12 to 60 months, but both interest
rate and monthly payments are usually fixed.
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