Chattel Mortgage Repayment Schedule: Interest, Tax and Your Books
How a chattel mortgage repayment schedule splits interest and principal, what interest to claim each financial year, and where it sits in your books.
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Chattel Mortgage · Repayment Schedule · Your Books
Why does your first year of chattel mortgage repayments seem to pay off so little of the loan? The answer sits in the lender's repayment schedule, and the same schedule tells your accountant how much interest to claim each financial year and where the loan and balloon belong on your balance sheet.
Quick Answer
A chattel mortgage repayment schedule shows how each repayment splits between interest and principal, how much you still owe, and the balloon left at the end, which is what your accountant uses for interest claims and the balance sheet. It is the after-settlement view of your chattel mortgage; to work out repayments before you sign, use the chattel mortgage calculator.
Also called: chattel mortgage schedule, loan amortisation table, repayment schedule. A lender's "schedule" can mean the goods schedule in the contract or the repayment table; this insight means the repayment table.
What does a chattel mortgage repayment schedule show?
A chattel mortgage repayment schedule shows every repayment date, the repayment amount, how much of it is interest, how much reduces the loan, the balance owing after it, and the balloon payment due at the end. Most lenders issue it at settlement or make it available in their customer portal, and it stays the same for the life of a fixed-rate loan unless you change the loan.
It is a record of the loan you have already signed, not a quote. If you are still comparing options and want to see what a different term or balloon does to the monthly figure, the chattel mortgage calculator does that job. How the product itself works, from deposit to ownership, is covered in the chattel mortgage guide, and the small business chattel mortgage guide walks through when it suits a business.
Is the goods schedule the same as the repayment schedule?
The goods schedule is not the same as the repayment schedule. The goods schedule sits inside the contract and describes what is financed: make, model, serial or VIN, and the amount financed. The repayment schedule is the table of payments over the term. Your accountant needs both, the first to record the asset and the second to record the loan.
On the lender's schedule
- Each repayment date and amount
- The interest and principal in each repayment
- The balance owing after each repayment
- The balloon and when it falls due
Not on it, needed in your accounts
- Interest grouped by your financial year
- The split between current and non-current debt
- Your business-use share of the interest
- Depreciation and the GST credit on the goods
Why is so much of each early repayment interest?
Early repayments carry the largest interest share the loan will ever have because lenders charge interest on the reducing balance, and the balance is highest at the start. Each month the interest is worked out on what you still owe, the rest of the repayment reduces the loan, and the next month's interest is a little smaller. On a long term or a higher rate, interest can be most of the early repayments.
A balloon makes the effect stronger. Because part of the loan is deferred to the end, the monthly repayment is lower, but the balance falls more slowly, so interest stays a bigger share of each repayment for longer. That is why owners look at a year of statements and see the balance has barely moved. The trade-offs of setting a balloon are covered in balloon payments and residual values.
| Period | Repayments in the period | Interest | Principal | Balance owing at the end |
|---|---|---|---|---|
| First month | About $1,295 | About $533 | About $762 | About $79,240 |
| Year one (12 repayments) | About $15,550 | About $6,060 | About $9,490 | About $70,510 |
| Year two | About $15,550 | About $5,270 | About $10,280 | About $60,240 |
| Year three | About $15,550 | About $4,420 | About $11,130 | About $49,110 |
| Year four | About $15,550 | About $3,490 | About $12,050 | About $37,050 |
| Final month | About $1,295 | About $170 | About $1,125 | About $24,000 |
| Balloon at the end | About $24,000 | Nil | About $24,000 | Nil |
The example assumes $80,000 financed over five years with monthly repayments, a balloon of around 30 per cent and an illustrative fixed rate of around 8 per cent a year. It is example only, not a rate quote; your own rate, fees, term and balloon vary by lender and change every figure. The shape is the point: in year one, around $15,550 of repayments reduces the loan by only around $9,490.
How much chattel mortgage interest can you claim each financial year?
To find the interest for a financial year, add up the interest lines on the repayment schedule that fall in that financial year, not the repayments. Only the interest column is the cost of borrowing. The principal column is the loan being paid back, and the cost of the goods themselves is claimed through depreciation or the instant asset write-off where it applies, not through the repayments.
Two things then shape the number. First, settlement rarely lines up with 1 July, so the first and last financial years of the loan usually hold only part of a year's repayments. Second, if the goods are not used wholly for the business, the claim generally follows your business use percentage.
How depreciation is calculated on the goods, and over what effective life, is covered in the business vehicle depreciation schedule insight. How the GST credit on the purchase price is claimed is covered in the chattel mortgage tax strategy insight. What you claim in your own return is a question for your accountant or registered tax agent.
How do you record a chattel mortgage in your books?
A chattel mortgage is usually recorded as three things at settlement: the asset at its cost, the GST credit if the business is registered for GST, and the loan as a liability. Because the business owns the goods from the start, the asset goes on the balance sheet straight away, and each repayment is then split between interest expense and a reduction of the loan, line by line from the schedule.
In our own files, the books that cause trouble at year end are the ones where each repayment was coded as a single expense. The loan balance in the accounts then never matches the lender's statement, and someone has to unpick a year of entries.
What are unexpired interest and charges?
Unexpired interest and charges is the part of the total interest and fees on the contract that has not been earned yet. Some contracts disclose the total charges up front, and some bookkeepers record the loan at that gross amount, with an unexpired interest and charges account sitting against it. Each period, the interest that has been earned moves from that account to interest expense, so the net loan matches the schedule. Recording the loan at the amount financed and expensing interest as it falls due reaches the same place. Your accountant picks the method; the schedule supplies the numbers for either.
Is a chattel mortgage a current or non-current liability?
A chattel mortgage is usually both: the principal due in the next twelve months is current, and the rest of the balance is non-current. The government's guide to setting up a balance sheet describes current liabilities as amounts due and payable within one year, and lists loans under long-term liabilities. A chattel mortgage straddles both, so your financial statements split it.
The balloon sits in non-current liabilities until its final year, then moves to current when it falls due within twelve months. Using the illustrative table, at the end of year one around $10,280 of principal is due in the next twelve months and is current, while around $60,240, including the balloon, is non-current. At the end of year four, the final year's principal and the balloon are all due within twelve months, so the whole balance of around $37,050 is current.
This matters beyond tidy accounts. When you apply for more finance later, lenders read the current liabilities line when they look at working capital, and a balloon that has just moved to current can make the business look tighter than it is unless the accountant notes the refinance plan. How a revolving facility is treated is a different question, covered in is a bank overdraft an asset or a liability.
What documents does the lender send after settlement?
After settlement, lenders typically provide the repayment schedule, regular statements, and, with some lenders, an annual interest summary; the dealer or seller provides the tax invoice for the goods. What arrives, and whether it comes by email or through a portal, varies by lender, so it is worth asking at settlement where each document will live.
- Repayment schedule. The full table of repayments, interest, principal, balance and balloon. If you did not receive one, ask the lender for it in writing.
- Statements. Show repayments made, fees charged and the balance on a date. Use them to reconcile the loan account in your books.
- Annual interest summary. Some lenders issue one for the financial year; where they do not, the schedule and statements give your accountant the same figure.
- Tax invoice for the goods. Comes from the seller, not the lender, and supports the asset cost and the GST credit.
If you want to sell, refinance or clear the loan early, ask the lender for a payout figure valid to a set date. The balance on the schedule is not the payout figure, because the payout can include accrued interest, early termination fees or break costs, which vary by lender and contract.
What chattel mortgage mistakes show up at tax time?
The common chattel mortgage mistakes at tax time are claiming the whole repayment instead of the interest, leaving the balloon out of liabilities, claiming the GST credit twice, and using the wrong business-use share. Where this commonly lands is a lodged return or BAS that has to be amended, and a loan balance that no longer matches the lender.
- Claiming the whole repayment. The principal part repays the loan; it is not an expense. The goods are claimed through depreciation or the write-off.
- Missing the balloon. The balloon is part of the loan from day one. If it is left off the balance sheet, liabilities are understated until it falls due.
- Double-claiming GST. The GST credit on the goods is generally claimed once, on the purchase. Coding repayments with GST claims it again.
- The wrong business-use share. A vehicle used partly for private travel needs the same business-use share applied to interest and depreciation, backed by records such as a logbook.
Most of these are fixed by handing your bookkeeper the schedule at settlement rather than at year end. How the interest, depreciation and GST are treated in your return is for your accountant to confirm. More guides on running the numbers sit in the Business Owners Hub.
The repayment schedule is the document that turns a chattel mortgage into correct books. Each repayment splits between interest on the reducing balance and principal, so early repayments reduce the loan slowly, more so with a balloon. For tax, add up the interest lines in the financial year and apply the business-use share. For the balance sheet, the principal due in the next twelve months is current, and the balloon stays non-current until its final year.
Key takeaway: give your bookkeeper the lender's repayment schedule at settlement, and let the interest column, not the repayment, drive what you claim.Frequently Asked Questions
You work out a chattel mortgage amortisation schedule by charging each month's interest on the balance still owing, taking that interest out of the repayment, and reducing the balance by what is left, then repeating until only the balloon remains. The lender's own schedule is the one to rely on, because it uses your exact rate, fees and dates. To test repayments before you sign, use the chattel mortgage calculator.
You get your chattel mortgage repayment schedule from the lender, usually in the settlement documents or the lender's customer portal. If you cannot find it, ask the lender for it in writing, along with recent statements. Your broker can also request it for you if they arranged the chattel mortgage.
A chattel mortgage schedule is either the goods schedule in the contract, which describes what is financed, or the repayment schedule, which lists each repayment's interest, principal and remaining balance. Lenders use the word for both, so check which one you are being asked for. The repayment schedule also shows the balloon payment due at the end.
The chattel mortgage interest you can generally claim this financial year is the total of the interest lines on your repayment schedule that fall between 1 July and 30 June, adjusted for your business use percentage. It is not the total of your repayments, because the principal part is not an expense. Your accountant or registered tax agent confirms the amount for your return.
The balloon payment is a current liability only once it falls due within the next twelve months; before then it sits in non-current liabilities. In practice that means it moves to current in the loan's final year. How to plan for a balloon that is coming due is covered in balloon payments and residual values.
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