Best Chattel Mortgage Interest Rates

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What are the best chattel mortgage interest rates?

The best chattel mortgage rates in Australia currently start from around 7% p.a. and are fixed for the term of the loan. To get the best — i.e. 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 offered on brand-new vehicles
  • Are offered to borrowers with a good credit rating
  • Are offered to businesses and individuals with a high and stable income
  • Will be available on loans with or without balloon payment
  • May not be the best choice if there are high fees attached
  • Are often offered by non-bank lenders or finance brokers

A chattel mortgage will have a lower interest rate than an unsecured personal loan. The vehicle you purchase will act as security, which means risk to the lender is reduced.

When applying for a chattel mortgage, check to see which types of vehicles a lender will finance. For example, some very specialist vehicles or machinery may not be eligible, or will attract a higher interest rate.

Best chattel mortgage interest rates in Australia

Vehicle ageInterest rates starting from


7.00% p.a.

5 years old

9.00% p.a.

12 years old

10.00% p.a.

Note: These are sample rates. The chattel mortgage interest rate you qualify for may be different.

chattel mortgage interest rates

How do I qualify for the best rate on a chattel mortgage?

Chattel mortgage interest rates reflect the level of risk your borrowing presents to a lender. The lower the risk, the lower the interest rates. If you have a good credit history (you can check your credit score for free in advance of applying) and a high income, you’ll present less risk to a lender than someone with a poor credit history and low income.

Other factors that impact the interest rate applied to your chattel mortgage include:

  • The amount you wish to borrow
  • The type of vehicle
  • The age of the vehicle
  • The length of your loan
  • How long your business has been operating
  • Which industry you're in
  • If you own a property
How lenders assess your application

How lenders assess your chattel mortgage application

Like all business loans, lenders assess chattel mortgage applications based on the 5 C's.

  • Credit rating — Based on your history of paying back other loans and credit.
  • Capacity — Your ability to repay the loan from an assessment of your income and your current debts.
  • Capital — Any deposit put toward the purchase of the vehicle. A deposit reduces the debt, and therefore the risk to a lender.
  • Collateral — This is any asset that is used to secure the debt — in a chattel mortgage, this is the vehicle you finance.
  • Conditions — The health of your business and what you’ll use the funds for. Lenders may also look at industry trends and anything that may affect your ability to repay the loan.
Car loan balloon payments

Can a balloon payment lower my chattel mortgage interest rate?

Chattel mortgages can be set up to include a balloon amount, which results in lower regular repayments. But a balloon payment will not give you a lower interest rate. Instead the lower repayments are offset by a large, final payment.

You can use our chattel mortgage repayment calculator to estimate the impact of a balloon payment on your repayments and total finance cost.

Chattel mortgage balloon payment calculation table

FeatureChattel Mortgage 1Chattel Mortgage 2

Loan amount



Loan term

5 years

5 years

Balloon amount



Interest rate



Monthly repayments



Important: This is a hypothetical calculation as an illustration of how balloon payments affect monthly repayment amounts.

compare chattel mortgage interest rates

How can I compare interest rates for a chattel mortgage?

If you really want to get the best interest rate on a chattel mortgage, you’ll need to look at the comparative interest rate. In other words, the effective interest rate 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.

You can see in the table below how important it is to work out the actual interest rate you’ll be paying on your loan. It could save you thousands.

The lowest chattel mortgage rates are NOT always the cheapest

FeatureChattel Mortgage 1Chattel Mortgage 2




Advertised interest rate



Application fees



Monthly fees



Term (length)

5 years

5 years

Monthly repayment amount



Total amount to repay



Hypothetical examples only and not based on real chattel mortgage products or rates.

How do I apply for a chattel mortgage?

You'll find out what chattel mortgage interest rate you qualify for when you make an application.

Most banks offer chattel mortgages. But you may find more competitive rates from specialist asset finance lenders.

These non-bank lenders generally provide a simple, online application process and sometimes pre-approval.

There are two types of application for a chattel mortgage: streamlined and standard. A streamlined application is the industry term for the simplest type of deal. The type of application will depend on the value of vehicle or vehicles you wish to finance, your time in business, and your credit rating.

  • If you want to finance a vehicle up to the value of $150,000 and have been in business 12 months or more, you’ll most likely go qualify for the streamlined application process.
  • If you want a chattel mortgage for a vehicle or vehicles greater than $150,000, or have been in business less than 12 months, you’ll need to go through the standard application process.

MONEY TIP: You can still get a low chattel mortgage interest rate through either application process. The rate you are offered will still be determined by the level of risk you present to a lender.

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Frequently asked questions about chattel mortgage interest rates

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Interest rates for a chattel mortgage are usually fixed between 4.00% and 6.00%. Interest rates will vary for chattel mortgages depending on the type and age of asset you are wishing to purchase. Brand-new vehicles under 4.5 tonne will offer the lowest rates.

You can get lower repayments by combining a low interest with low fees, and a longer loan term. However, a longer loan term will increase the amount of interest you pay overall.

You could also keep your chattel mortgage repayments low by borrowing a lower amount – for example by contributing a deposit.

Another way to lower your regular repayments is with a balloon amount. A balloon payment is a lump sum payment at the end of your chattel mortgage agreement. A balloon payment can reduce the amount you’ll pay on regular repayments, but it will not give you a lower interest rate.

Chattel mortgage interest rates are relative to the risk-level of the borrower. Lenders assess risk by looking at a borrower’s credit rating, ability to repay the loan, any deposits or security provided on the loan, and the financial strength of your business. The lower your risk level, the lower the interest rate offered.

To compare interest rates on a chattel mortgage and get the best rate for your situation, you’ll need to look at the comparative rate instead of the advertised rate. Unlike the advertised rate, a comparative rate will include all associated fees to provide a more accurate repayment amount. You might even find the lowest rate isn’t always the cheapest option.

Depending on the business and how it is registered for GST, and what kind of asset is being financed, you may be able to claim chattel mortgage interest costs and loan fees as a tax deduction. This would only apply when the vehicle is used for business purposes.

Always seek advice from a qualified tax advisor to understand how any interest tax deductions may apply to your situation.

Interest rates on chattel mortgage are usually fixed for the term of the loan. A fixed-term interest rate on a chattel mortgage means any changes to lender interest rates during the loan period will not affect your repayments.

Written by

Shaun McGowan founder

Loans Expert

Shaun McGowan

Reviewed by

Sean Callery Editor


Sean Callery


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North Sydney, NSW, 2060, Australia

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