The bookkeeping behind an asset purchase via a Chattel Mortgage

It is very common for businesses to purchase major assets such as motor vehicles via a loan. They can use a commercial bank loan but often finance is “purchased” by way of either Hire Purchase or a Chattel Mortgage. In this week’s blog we will look at a purchase via Chattel Mortgage agreement and how to post it to the accounts.

Chattel Mortgage

A Chattel Mortgage is a type of loan typically used to purchase motor vehicles or other major business equipment. It is called a “mortgage” because the financier retains the title of the item purchased until the final payment is received. There are several financial benefits of a Chattel Mortgage including:

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