# Chattel mortgage — what it is and how it works for tradies > A chattel mortgage is the go-to asset finance for NZ trade businesses — your business owns the asset from day one, and the lender registers a security interest over it. Source: https://tradiefinance.co.nz/glossary/chattel-mortgage Published: 2026-04-01T08:00:00.000Z Category: asset-finance Tags: glossary, chattel-mortgage, asset-finance Image: https://tradiefinance.co.nz/images/resources/generated/tradie/glossary/chattel-mortgage-primary.jpg Image alt: Work vehicles on a New Zealand build site for Chattel mortgage — what it is and how it works for tradies --- ## What a chattel mortgage is A **chattel mortgage** is an asset finance structure where your business owns the asset from the moment you buy it, and the lender registers a security interest (the "mortgage") over that asset until the loan is paid off. A "chattel" is just a movable business asset — a ute, a trailer, a digger, a workshop machine. It's the standard way trading businesses in NZ finance work vehicles, plant and equipment, as long as the business has been going long enough to qualify. TradieFinance is a broker, not a lender — we place your application with the finance company that best fits your setup, and that company is the one that registers the security interest. ## How it differs from hire purchase The big difference comes down to who owns the asset while the loan runs. | | Chattel mortgage | Hire purchase | | --- | --- | --- | | Who owns the asset during the loan | Your business, from day one | The lender, until the final payment | | Security | Lender registers a security interest over the asset | Lender retains title | | On your books | Asset sits on the business balance sheet from day one | Treated similarly for many businesses, but title transfers at the end | In a [hire purchase](/glossary/hire-purchase), the lender holds ownership until you make the last payment. With a chattel mortgage, the asset is yours from purchase and the lender protects itself by registering a [security interest on the PPSR](/glossary/security-interest-ppsr) instead. ## Why the ownership difference matters Owning the asset from day one changes three practical things for a trade business: - **GST**: if your business is GST-registered, you can generally claim the GST on the full purchase price as input tax in the period you buy the asset, rather than dribbling it out across each repayment. The GST portion is worked out using the 3/23 rule on a GST-inclusive price. Always confirm timing and eligibility with your accountant or IRD. - **Depreciation**: because your business owns the asset, you depreciate it against business income from day one. Depreciation is a separate tax matter from the loan itself — the repayments and the depreciation claim are not the same thing. - **Balance sheet**: the asset goes on the business books from purchase, which can matter for how your accounts and borrowing capacity look. The chattel mortgage is how you pay for the asset. GST and depreciation are how the asset is treated for tax. Get your accountant to line up the tax side so the cashflow timing actually works in your favour. ## When a chattel mortgage makes sense A chattel mortgage tends to be the right fit when: - You're trading as a registered business — a limited company or a sole trader with a clear business purpose. - You're GST-registered, which is where most of the cashflow advantage comes from. - You've got a few months of trading behind you and financials you can put your hands on. - The asset is genuinely for the business. A logbook or a sensible business-use split makes the tax side cleaner. Because this is genuine business-purpose finance, it largely sits outside the consumer CCCFA regime — but the lender will still want to see that the business can comfortably service the repayments. If a couple of those boxes aren't ticked yet, a [hire purchase](/glossary/hire-purchase) — sometimes in your personal name while the business finds its feet — is often the cleaner path until you've got more trading history behind you. ## Talk it through with a broker Not sure whether a chattel mortgage or hire purchase suits your setup? That's exactly the call we have with tradies every week. [Book a quick call](/book-a-call) or [ask us a question](/help) and we'll talk you through it in plain English — no pressure, no jargon. ## See also - [Hire purchase](/glossary/hire-purchase) - [Security interest on the PPSR](/glossary/security-interest-ppsr) - [GST on asset finance](/glossary/gst-on-asset-finance) - [Financing your first work van](/blog/financing-your-first-work-van)