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If it appreciates
…buy it,

If it depreciates
…lease it!

~ J. Paul Getty

ASSET PURCHASE CONTRACTS
& CHATTEL MORTGAGES

These contracts enable companies and business professionals to finance equipment purchases without capital outlay.

The main difference between the two contracts is that:

  • with an asset purchase contract the title vests with the financier. At the end of the contract, the title automatically passes to the borrower.
  • with a chattel mortgage, the client acquires immediate ownership of the equipment, over which a charge is registered with ASIC as security for the loan.

The full purchase price of assets which are predominantly for business use may be financed this way, with payment structured to match cash flow considerations. 

The tax deduction would normally be the interest portion of the payments plus the depreciation on the assets financed. 

Key Features

Term:
Generally two to five years, although longer terms may be negotiated.

Payment Options:
Usually fixed payments are made monthly, quarterly, semi-annually, or annually, to suit the cash flow. Irregular payments are also possible (including a balloon payment at the end of the contract).

Collateral:
Generally, the equipment being purchased provides the sole security.

These contracts are very flexible and adaptable and suit most private companies' finance requirements.  They are also sometimes used by public companies.


For more information contact us or view other products in our range

 

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