How to use our chattel mortgage repayment calculator
Our chattel mortgage repayment calculator lets you view your weekly, fortnightly, or monthly repayments based on your loan amount, interest rate, and loan term.
You can also factor in establishment fees and an optional balloon payment to accurately estimate your total finance costs. Additionally, you’ll see a breakdown of interest payable over the loan term.
Loan details you'll need to enter
Loan amount
The amount of money you’re borrowing under the chattel mortgage agreement. This is usually the same as the value of the vehicle or asset you’re buying, unless you’re contributing a deposit or borrowing additional funds to cover other costs.
Interest rate and loan term
This is the fixed interest rate the lender will apply to your chattel mortgage. Your chattel mortgage rate will depend on your business risk profile. Plus, the length of your chattel mortgage (i.e. how long it will take to repay the loan).
Establishment fees
Any upfront fees charged by the lender when establishing your finance agreement. Keep in mind that lenders may also charge ongoing fees (e.g. monthly account keeping fees).
Balloon payment
Chattel mortgage agreements often come with a balloon payment option — usually calculated as a percentage of the total loan amount.
Chattel mortgage repayment formula explained
Our chattel mortgage calculator uses an amortisation calculation method. This provides an accurate estimate of your repayments based on your loan amount, annual interest rate and loan term.
Your chattel mortgage is set up with a fixed rate and term. Your repayments will cover both the interest on your loan, and the principal amount.
Initially, a greater portion of your repayments will go towards repaying the interest amount. This is simply because the loan balance is higher at the start and interest is charged as a percentage of the balance.
Over time, more of your repayments will go towards reducing the principal amount, as the interest costs reduce.
The simple formula for calculating chattel mortgage repayments is: loan amount / discount factor. The discount factor is calculated by dividing the interest rate of your loan by the number of payments per year (12 for monthly, 26 for fortnightly, or 52 for weekly) to first obtain the periodic interest rate.
The formula is expressed as: (((1 + i) ^n) - 1) / (i (1 + i)^n)
n = the number of repayments
i = the annual interest rate
Chattel mortgage repayments calculation example
In the example below, we’ll use a $50,000 loan at a 12% interest rate, repaid monthly over five years without a balloon payment attached to the loan:
- Calculate the number of repayments for the loan period: Divide the annual interest rate (12%) by the number of repayment periods per year (12). In this case, 12 repayments over five years = 60 repayments over the loan term.
- Calculate the interest rate for the period: Divide the annual interest rate (12%) by the number of annual payments (12) = 1%. Then, convert it into a decimal representation = 0.01.
- Calculate the discount factor: Use the decimal figure above to calculate the discount factor: ((((1+0.01)^60) - 1) / (0.01(1+0.01)^60) = 44.9551.
- Calculate your monthly repayment amount: Divide the loan amount ($50,000) by the discount factor to find the monthly repayment amount: 50,000 / 44.9551= $1112.2208.
- Get your estimated repayment amount: Round this figure to a double-digit decimal amount. Your monthly repayments on this loan would be $1,112.22.
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