Finance Dictionary : Chattel Mortgage

Chattel Mortgage


Discover Chattel Mortgage, a business financing arrangement where ownership of the asset begins from the start. Learn how it combines regular payments with the flexibility of a final 'balloon' payment, allowing businesses to acquire assets while preserving cash flow.



A chattel mortgage shares similarities with a hire-purchase agreement, primarily concerning the acquisition of assets for business purposes. However, what sets a chattel mortgage apart is that the business assumes ownership of the asset from the outset rather than upon the completion of the payment term.


This financing arrangement involves regular ongoing payments, much like traditional loans, with the added flexibility of a final ‘balloon’ payment option, allowing for reduced regular payments throughout the agreement’s duration. Chattel mortgages are commonly employed by businesses to acquire essential assets such as vehicles, equipment, or machinery while preserving cash flow.


The immediate ownership of the asset grants businesses certain advantages, including potential tax benefits and asset depreciation deductions. The final balloon payment option further tailors the financing to meet the specific needs and circumstances of the business.


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