Chattel mortgage · Sole traders
Chattel mortgage for sole traders
Sole trader finance is business lending to an individual trading under their own ABN, where the applicant and the business are the same legal person, so personal credit and personal income are assessed alongside business banking.
How a chattel mortgage works for sole traders
A chattel mortgage works for a sole trader exactly as it does for a company: you own the vehicle or machine from settlement and, if registered for GST, generally claim the GST on the purchase price in the next BAS. The difference is the assessment — the lender looks at your personal credit file and your ABN together. Where the asset is used partly privately, only the business-use proportion is deductible, so keep a logbook. Your accountant should confirm the apportionment before you claim.
The cash-flow pattern we plan around
Irregular drawings and income concentrated around job completion or invoice payment, frequently with business and personal spending running through the same accounts.
What sole traders typically fund
- A work vehicle or first piece of equipment
- Tools and trade equipment
- Cash flow between invoices
- BAS and income tax liabilities
Chattel mortgage for sole traders: the numbers
| Typical amounts | $10,000 – $2,000,000 |
|---|---|
| Term | 12–84 months |
| Indicative rates | 6.9% – 14.5% p.a. |
| Repayments | Monthly (weekly or fortnightly available) |
| Speed | 24–48 hours for low-doc up to $150k; longer for full-doc |
| Documents sole traders usually need | ABN and personal identification · 6 months of bank statements covering business income · Most recent individual tax return or notice of assessment |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Sole trader business loan
A sole trader business loan is finance provided to an individual trading under their own ABN, assessed on both the business banking and the applicant’s personal credit position because there is no separate legal entity.
Low-doc assessment
Low-doc assessment is a lending approach that uses bank statements or an accountant’s declaration in place of full financial statements, commonly used where a sole trader’s tax returns are not yet lodged.
What is a chattel mortgage?
A chattel mortgage is a business loan used to buy a movable asset (a chattel) such as a ute, truck, excavator or equipment. The business takes ownership immediately and the lender registers a security interest over the asset until it is paid off.
Chattel mortgage balloon payment
A balloon is a lump sum, typically 0–40% of the purchase price, paid at the end of the term. It lowers regular repayments but must be paid, refinanced or covered by selling the asset when the term ends.
Questions from sole traders
Can a sole trader get business finance?
Yes. Sole traders with an ABN are financed for vehicles, equipment, working capital and property, with the applicant’s personal credit file and income assessed alongside the business banking because the individual and the business are the same legal person. Two years of ABN history and clean credit unlock low-doc approvals.
Does business and personal spending in one account cause problems?
It makes assessment harder but not impossible. Lenders read the statements to separate business income from personal spending, and a broker explains the pattern. Opening a separate business account a few months before applying helps, as does keeping drawings regular.
Can a sole trader finance a ute or van through the business?
Yes. A chattel mortgage in the sole trader’s name with the ABN lets the business-use portion of interest and depreciation be claimed and the GST on the purchase claimed if registered, and vehicles designed to carry a load are usually outside the car limit. Your accountant confirms the business-use percentage.
What documents does a sole trader need?
Identification, ABN and GST registration, six to twelve months of bank statements for unsecured loans, a quote for any asset, and tax returns or a notice of assessment for larger amounts. Low-doc approvals for vehicles and equipment often need only identification and the quote.