If you’re an ABN holder weighing up a chattel mortgage vs personal loan to buy a vehicle for your business, the right choice usually comes down to how the vehicle is used and what tax outcomes matter most to you. Both can get you into a car quickly, but they work very differently once tax time rolls around.

What Is a Chattel Mortgage?

A chattel mortgage is a business car loan built specifically for ABN holders and companies. The lender advances the funds, you take ownership of the vehicle immediately, and the lender registers a security interest (the “chattel mortgage”) over the car until the loan is paid out. Because the vehicle is yours from day one and used for business purposes, eligible businesses can typically claim the GST on the purchase price upfront and depreciate the vehicle as a business asset.

What Is a Personal Loan?

A personal loan is an unsecured or secured loan taken out in your own name, unrelated to any ABN or business structure. It’s simple and flexible, but because it isn’t a business finance product, it usually doesn’t come with the GST credits, depreciation claims or interest deductions that a chattel mortgage can offer when the vehicle is used for business. Personal loan interest rates are also often higher than a chattel mortgage, since the lender isn’t securing the loan against the vehicle in the same way.

Chattel Mortgage vs Personal Loan: Key Differences

In short: a chattel mortgage is secured against the vehicle and designed for business use, generally with lower rates and potential tax advantages. A personal loan is more flexible in how the funds are used but usually costs more over the life of the loan and won’t unlock the same business tax benefits if the car is used for work.

Which Should You Choose?

If the vehicle will be used more than 50% for business purposes and you hold an ABN, a chattel mortgage is usually the more cost-effective option. If the car is mostly for personal use, a standard car loan or personal loan may be simpler. Every business’s situation is different, so it’s worth speaking with your accountant about which structure suits your tax position before you commit.

Want to see the numbers for yourself? Try our business car loan calculator to estimate repayments, or get a free, no-obligation quote and one of our brokers will help you compare chattel mortgage options against your other finance choices.