Benefits of a chattel of mortgage option for a business?
More and more Filipinos are turning to banks for car financing. A study by Ken Research in 2019 predicts that auto loans in the Philippines will soar to P4.3 trillion by 2023.
But The Auto financing can be confusing, especially when it comes to terms like chattel mortgages. But don't worry, it's simpler than it sounds! Let's break down what chattel security for an auto loan is and how it works.
What is a chattel of mortgage?
The chattel mortgages, also known as goods loans.It's a popular finance option with a chattel mortgage, the lender provides the loan using the vehicle or equipment as security. Your business makes regular repayments until the loan is fully paid off.
With a chattel mortgage, your business gains ownership of the vehicle or equipment right from the start of the loan term. It serves as collateral for the loan. Typically lasting between 1 and 7 years, this financing option allows your business to claim interest on loans and tax depreciation during tax season, as long as the vehicle or equipment is generating income for your business.
How does it work?
Just like a secured loan for a car or equipment, the lender provides the funds for your purchase, and you become the owner right away. The vehicle or equipment serves as collateral for the loan. Once the loan, including any balloon payment, is fully settled, you become the owner of the asset.
Benefits of a chattel of mortgage option for a business?
You can pick a loan term that fits you best - typically ranging from 1 to 7 years.
Lock in a fixed interest rate for peace of mind. Know exactly what your installments or repayments will cost. Say goodbye to uncertainty!
Gain immediate ownership and use of the asset.
You can opt for a balloon payment to reduce your regular repayments. Take control of your budget with this flexible option!
Potential tax benefits Let you enjoy deductions on the interest component and tax depreciation costs of the vehicle or equipment. Maximize your savings and minimize your tax burden.
Enjoy flexibility in repayment options tailored to your business's cash flow. Choose from monthly, quarterly, half-yearly, or annual repayments.
Pay attention!In the Philippines, specific regulations govern chattel mortgages. For instance, all approved auto loans must be registered with the Registry of Deeds for legal recognition. Additionally, after full payment, chattel mortgages must be canceled at the same office. Stay compliant and secure with these important procedures!
Don't rush into a chattel mortgage. It's a significant commitment that requires thoughtful consideration. Take your time and make a wise choice!
