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What are the best chattel mortgage interest rates?
The best chattel mortgage rates generally start from around 7.50% p.a. but can range up to 15% p.a. or higher for some borrowers. To get the best rate — i.e. the lowest rate — a borrower will want to present as little risk to the lender as possible.
In summary, the best chattel mortgage interest rates are for:
- Financing brand-new vehicles or assets
- Business borrowers with a good credit history (you can check your credit score for free before you apply)
- Businesses with a steady income & trading history
- Homeowners (i.e. asset-backed borrowers)
- Borrowers who contribute a deposit towards the loan
- Shorter loan terms (chattel mortgage terms range from 1-7 years)
According to Money borrower data, the average chattel mortgage amount requested for vehicles is $58,706 and $181,434 for machinery or equipment.
Chattel mortgage interest rates comparison
Chattel mortgage amount | $10,000 |
|---|---|
Monthly repayments (7.5% p.a. interest rate) | $200.38 |
Monthly repayments (9.5% p.a. interest rate) | $210.02 |
Monthly repayments (11.5% p.a. interest rate) | $219.93 |
Chattel mortgage amount | $20,000 |
Monthly repayments (7.5% p.a. interest rate) | $219.93 |
Monthly repayments (9.5% p.a. interest rate) | $420.04 |
Monthly repayments (11.5% p.a. interest rate) | $439.85 |
Chattel mortgage amount | $30,000 |
Monthly repayments (7.5% p.a. interest rate) | $601.14 |
Monthly repayments (9.5% p.a. interest rate) | $630.06 |
Monthly repayments (11.5% p.a. interest rate) | $659.78 |
Chattel mortgage amount | $40,000 |
Monthly repayments (7.5% p.a. interest rate) | $801.52 |
Monthly repayments (9.5% p.a. interest rate) | $840.07 |
Monthly repayments (11.5% p.a. interest rate) | $879.70 |
Chattel mortgage amount | $50,000 |
Monthly repayments (7.5% p.a. interest rate) | $1,001.90 |
Monthly repayments (9.5% p.a. interest rate) | $1,050.09 |
Monthly repayments (11.5% p.a. interest rate) | $1,099.63 |
Chattel mortgage amount | $60,000 |
Monthly repayments (7.5% p.a. interest rate) | $1,202.28 |
Monthly repayments (9.5% p.a. interest rate) | $1,260.11 |
Monthly repayments (11.5% p.a. interest rate) | $1,319.56 |
Chattel mortgage amount | $70,000 |
Monthly repayments (7.5% p.a. interest rate) | $1,402.66 |
Monthly repayments (9.5% p.a. interest rate) | $1,470.13 |
Monthly repayments (11.5% p.a. interest rate) | $1,539.48 |
Chattel mortgage amount | $80,000 |
Monthly repayments (7.5% p.a. interest rate) | $1,603.04 |
Monthly repayments (9.5% p.a. interest rate) | $1,680.15 |
Monthly repayments (11.5% p.a. interest rate) | $1,759.41 |
Chattel mortgage amount | $90,000 |
Monthly repayments (7.5% p.a. interest rate) | $1,803.42 |
Monthly repayments (9.5% p.a. interest rate) | $1,890.17 |
Monthly repayments (11.5% p.a. interest rate) | $1,979.33 |
Chattel mortgage amount | $100,000 |
Monthly repayments (7.5% p.a. interest rate) | $2,003.79 |
Monthly repayments (9.5% p.a. interest rate) | $2,100.19 |
Monthly repayments (11.5% p.a. interest rate) | $2,199.26 |
| Chattel mortgage amount | Monthly repayments (7.5% p.a. interest rate) | Monthly repayments (9.5% p.a. interest rate) | Monthly repayments (11.5% p.a. interest rate) |
|---|---|---|---|
$10,000 | $200.38 | $210.02 | $219.93 |
$20,000 | $219.93 | $420.04 | $439.85 |
$30,000 | $601.14 | $630.06 | $659.78 |
$40,000 | $801.52 | $840.07 | $879.70 |
$50,000 | $1,001.90 | $1,050.09 | $1,099.63 |
$60,000 | $1,202.28 | $1,260.11 | $1,319.56 |
$70,000 | $1,402.66 | $1,470.13 | $1,539.48 |
$80,000 | $1,603.04 | $1,680.15 | $1,759.41 |
$90,000 | $1,803.42 | $1,890.17 | $1,979.33 |
$100,000 | $2,003.79 | $2,100.19 | $2,199.26 |
What impacts chattel mortgage interest rates?
Here are the main factors lenders consider when determining the interest rate on your chattel mortgage. These are general factors that may apply – each lender assesses risk differently based on their own underwriting guidelines.
1. The age of the asset
Chattel mortgage interest rates are generally lower if you buy a new or demo vehicle compared to a used one. Newer vehicles generally have a higher resale value, which is less risky from a lender’s perspective. Brand-new vehicles under 4.5 tonnes will offer the lowest rates.
Based on analysis by Money.com.au, chattel mortgage providers only provide secured finance for vehicles or assets less than 12-15 years old.
2. The type of asset or equipment
Interest rates are generally higher if you’re using a chattel mortgage to finance heavy vehicles, plants, machinery, or equipment. Lenders may charge a 2-6% loading on these assets. This may apply to yellow goods for construction, trailers, medical or dental equipment, and even office and IT hardware.
Secondhand or specialised vehicles or assets typically have less resale demand (e.g. dog wash van, gym equipment) and will come with higher rates as a result.
3. Your business revenue & trading history
Established businesses with a consistent income and a track record of successful trading are typically considered less risky, making them eligible for lower interest rates than startups or businesses operating for less than two years.
4. Your business & personal credit rating
Chattel mortgage providers will generally check your business credit score and the credit rating of your company directors. They will look for the likes of missed payments, defaults and insolvencies (e.g. bankruptcies).
Based on our analysis of various business lending criteria, lenders generally look for a minimum director credit score of 500-600 and a minimum company credit score of 475-500. Having a good credit score may mean you qualify for a lower rate.
5. Your business assets & liabilities
When determining your chattel mortgage interest rate, lenders generally consider your business revenue and expenditure, any assets your business already owns (like equipment or vehicles), and current debts. Having fewer liabilities on your business balance sheet relative to assets can qualify you for a better interest rate and higher borrowing amount.
6. Whether it’s a dealer or private sale
Most lenders prefer that you buy a business vehicle or equipment from a licensed dealer, as you generally get a statutory warranty with the purchase. You generally don’t get a statutory warranty through a private sale, although the manufacturer’s warranty may still be valid. Some lenders may apply a rate load of 0.50-1% on private sale purchases.
7. Whether you’re a homeowner
Business borrowers who own a home (or any residential property) are considered less risky than renters. That’s because homeowners are ‘asset-backed borrowers’ who may have the ability to borrow against their home equity to settle their outstanding debt. Based on Money.com.au borrower data, the majority of business owners applying for a chattel mortgage (58%) own a home.
Borrowers who own a home can generally also borrow more than non-property owners. According to our data, homeowners requested an average chattel loan amount of $117,269, while renters requested an average of $72,385.
How to compare chattel mortgage rates
The best way to compare interest rates on a chattel mortgage is to get personalised quotes from multiple lenders and look at the comparison or 'effective' rate that applies to each option. This is the rate you’ll be paying once all fees have been taken into account.
Sometimes, a slightly higher advertised interest rate with low fees can work out to be cheaper than a lower interest rate with high fees.
Why the lowest chattel mortgage rate is NOT always the cheapest
The answer, as this example shows, is fees...
Chattel mortgage amount | |
Chattel mortgage 1 | $80,000 |
Chattel mortgage 2 | $80,000 |
Advertised interest rate | |
Chattel mortgage 1 | 8% p.a. |
Chattel mortgage 2 | 8.25% p.a. |
Application fee | |
Chattel mortgage 1 | $550 |
Chattel mortgage 2 | $0 |
Monthly account keeping fee | |
Chattel mortgage 1 | $10 |
Chattel mortgage 2 | $0 |
Comparison/effective rate | |
Chattel mortgage 1 | 8.55% |
Chattel mortgage 2 | 8.25% |
Loan term | |
Chattel mortgage 1 | 5 years |
Chattel mortgage 2 | 5 years |
Monthly repayment | |
Chattel mortgage 1 | $1,632.11 (incl $10 monthly fee) |
Chattel mortgage 2 | $1,631.70 |
Total to be repaid | |
Chattel mortgage 1 | $98,477 |
Chattel mortgage 2 | $97,902 |
Cost difference | |
Chattel mortgage 1 | +$545 |
Chattel mortgage 2 |
| Chattel mortgage 1 | Chattel mortgage 2 | |
|---|---|---|
Chattel mortgage amount | $80,000 | $80,000 |
Advertised interest rate | 8% p.a. | 8.25% p.a. |
Application fee | $550 | $0 |
Monthly account keeping fee | $10 | $0 |
Comparison/effective rate | 8.55% | 8.25% |
Loan term | 5 years | 5 years |
Monthly repayment | $1,632.11 (incl $10 monthly fee) | $1,631.70 |
Total to be repaid | $98,477 | $97,902 |
Cost difference | +$545 |
How could a balloon payment impact your chattel mortgage interest costs?
Depending on the lender, you may have the option to include a balloon payment as part of your chattel mortgage. This is a residual lump sum due at the end of the loan term to pay the remaining loan balance.
Including a balloon payment in your chattel mortgage reduces your regular repayments, but it will result in paying more interest overall. That’s because you'll be paying interest on the full balloon payment amount over the entire loan term (instead of paying down the full loan amount gradually).
The lower the balloon payment, the less interest you pay. The balloon payment can range from 20-40% of your loan amount, depending on your agreement with your lender.
Businesses may opt for a balloon payment to help preserve cash flow throughout the loan term. You can use our chattel mortgage repayment calculator to estimate the impact of a balloon payment on your repayments and total finance cost.
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