Truck Chattel Mortgage in Australia: Structure, Tax & Cashflow (2025 Guide)
Truck chattel mortgage for owner-drivers – Switchboard Finance
Truck Chattel Mortgage in Australia: Structure, Tax & Cashflow (2025 Guide)
Truck chattel mortgage deals can be brilliant for cashflow – or a handbrake – depending on how term, balloon and contracts line up with the work your rig is actually doing. This guide walks through structure, tax treatment and refinance moves so you know exactly what you’re signing before you add the next truck.
How a truck chattel mortgage actually works
With a truck chattel mortgage, your business owns the rig from day one while the lender takes security over it. You pay down the loan in fixed instalments, often with a final balloon payment baked in to keep monthly repayments under control.
For strong ABN holders, this usually sits on top of existing low doc vehicle finance history. Lenders lean heavily on trading history and bank statements instead of endless financials – especially once you’ve proven you can run one or two trucks profitably.
Real example: A Melbourne owner-driver on a three-year contract upgrades from an older rigid into a late-model prime mover. Instead of a standard unsecured business loan, we structure a chattel mortgage over five years with a sensible balloon, using the truck itself as security and preserving headroom on their working capital loans limit for fuel, repairs and GST.
- You choose the truck (dealer or private sale) and agree on price and spec.
- The lender pays the supplier at settlement and registers PPSR over the asset.
- You repay the loan over the agreed term with interest and any final balloon.
- Match the term to the realistic working life of the truck.
- Size repayments to your average monthly cashflow, not peak weeks.
- Decide upfront if you’ll roll into another rig at the end or keep this one long term.
Tax, GST and cashflow: lining up the rig with the work
A big reason truckies choose chattel mortgage over straight lease is the way GST, depreciation and interest can be handled at tax time. The truck usually sits on your books as an asset while interest and certain running costs are claimed as deductions under ATO rules.
The key is to avoid chasing the lowest repayment at all costs. A huge balloon might feel good now but can crush you when the work changes or the second-hand market softens. A more balanced structure often works better than an ultra-aggressive one – especially if you already have other low doc asset finance facilities.
Real example: A regional fleet operator running three tippers wanted “the lowest repayment possible”. On paper, the lender would have offered a 40% balloon – but once we modelled cashflow, resale value and contract risk, the smarter play was a 20% balloon and slightly shorter term so they weren’t stuck owing more than the trucks would be worth at upgrade time.
- GST on the purchase price is often claimable in the relevant BAS period.
- Interest and depreciation can be structured to align with your accountant’s strategy.
- Balloon size should reflect realistic resale value, not just a target repayment.
- Map what the new truck will earn conservatively across a year.
- Stress-test repayments against a couple of quiet months or a lost contract.
- Decide if you’d rather keep more buffer in cash, overdraft or a line of credit.
Approvals, equity and when to refinance the truck
Once you’ve had the truck a few years, the numbers change. You might have paid down a chunk of principal, the asset’s value has shifted and the original structure no longer matches your work. That’s where strategic asset refinance can tidy things up.
Lenders will look at total debt across your trucks, trailers and any other business loans. If the fleet is working hard and the contracts are stable, they’re often comfortable to tweak terms, consolidate smaller facilities or restructure balloons before they become a problem.
Real example: A Sydney operator had two trucks on short, high-repayment deals and wanted to add a third vehicle. By refinancing the existing loans into one cleaner structure and extending the term slightly, we reduced monthly outgoings and freed capacity for the next truck – without touching their home loan.
- Strong repayment history on existing truck loans is a big tick for lenders.
- Equity in trucks or property can support larger facilities or extra vehicles.
- Consolidating scattered truck loans into one facility can simplify cashflow.
- Review each truck’s balance, value and remaining term annually.
- Flag any big balloons at least 6–12 months before they fall due.
- Decide whether to sell, refinance or roll equity into a newer rig.
If you’re already running multiple vehicles, cross-check this guide with Truck Finance Checklist 2025, How Much Truckies Can Borrow in 2025 and the Truckie Loan Pack to see how lenders view your overall position.
Designing your next truck deal with Switchboard Finance
The best truck deals start with the work, not the rate. We look at the loads you’re pulling, contract mix, depot costs and repair profile – then match that to the right structure across equipment finance, vehicle finance and cashflow facilities.
Because we sit across all the big transport-friendly lenders, we can see quickly whether you’re better off with a sharper rate and tighter covenants, or slightly higher pricing with more flexibility to add a second truck later. That includes planning around future upgrades using content like Low Doc Truck Finance Approval Tips and Prime Movers vs Rigids.
Real example: A Perth operator running a single prime mover wanted to add a second unit but was worried about “getting stuck” in repayments. We modelled a staged plan: refinance the first truck onto a cleaner structure, then set up a second chattel mortgage with a moderate balloon and buffer via business line of credit for fuel and maintenance – turning a stressful upgrade into a controlled growth step.
- We map your truck, trailer and cashflow needs on one page before choosing any products.
- You see side-by-side repayment, balloon and exit scenarios for each rig.
- We then place the deal with a lender that understands transport and low-doc policy.
- Start with a simple finance chat via Truckie Hub or Truckie Loan Pack.
- Share contracts, bank statements and any existing truck loan details.
- Lock in a structure that supports today’s work and tomorrow’s upgrade path.
Common questions about truck chattel mortgages
Quick answers for owner-drivers and fleet operators weighing up structure, terms and exit strategy.
Under a chattel mortgage your business owns the truck from settlement, while the lender holds security and you repay principal and interest over time. A lease is more like renting the truck with options at the end. Our glossary entry on term length shows how ownership structures and contract durations line up with how long you actually plan to keep a rig.
Strong, established operators sometimes get to 100% funding, but many deals work better with some equity in the mix – either cash or trade-ins. Lenders look at the deal’s LVR (loan-to-value ratio); a lower LVR usually means faster approvals and more flexibility on balloons and future upgrades.
Yes. If you’ve built equity in the truck or the original deal was set up on short, heavy repayments, refinancing can reset the term and balloon to something more sustainable. A clean payout figure from your current lender plus recent statements is usually enough to start modelling options.
No – each truck can sit on its own facility and you can mix lenders as needed. What matters is how the overall picture looks: repayments versus income, existing vehicle finance exposure and whether facilities like fleet limits or master asset lines make sense as you grow.
Once your application is approved, docs are signed and conditions met, the lender pays the dealer or seller and your contract starts. Our settlement glossary page steps through how funds flow, when PPSR is registered and when your first repayment is due for asset finance and business cashflow facilities.
If you’re looking at another prime mover, rigid, tipper or trailer and want the chattel mortgage to work with – not against – your cashflow, start with the Truckie Hub or go straight to the Truckie Loan Pack. We’ll map structure, tax and exit strategy before you sign anything.
