Chattel loans refer to loans for moveable property. Moveable property can include pieces of equipment, vehicles, mobile homes, or other items that are not permanently stationary.
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In this article, we’ll compare chattel loans to traditional mortgages and answer some of the most common questions we receive about this type of financing.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Chattel Loans
- Chattel Mortgage vs Traditional Mortgage
- Examples of Chattel
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Chattel Loans
Chattel loans refer to a form of financing for moveable property. Most commonly, chattel loans are used for financing the purchase of equipment and mobile homes. However, they can also be used to finance the purchase of any property that is not permanently stationary in one location.
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Chattel Mortgage vs Traditional Mortgage
The main difference between a chattel mortgage and a traditional mortgage is that a chattel mortgage is used to finance the purchase of moveable property while a traditional mortgage is used to finance the purchase of immovable property.
For clarity, immovable property refers to a property that is permanently fixed in one location, such as a home or condo. In contrast, moveable property is not permanently fixed and can, in theory, be relocated to a different location.
Additionally, it’s important to point out that the terms applied to a chattel mortgage are also different than those available through a traditional mortgage. In most cases, chattel mortgages have higher interest rates and restrictions on how long the term of the financing can be.
Importantly, each state regulates chattel mortgages differently. So, in order to fully understand the specific terms available (and not available) to you or your business, you should consult the specific rules in the state where you are looking to access financing. This also includes understanding when funds are available to you and what “in credit” means.
Examples of Chattel
As mentioned, examples of chattel financing include purchasing movable property like equipment and mobile homes. However, more specifically, chattel financing can be used for a wide range of farm equipment, vehicles, assets, and even livestock. Here’s a look at different chattel financing options you can consider.
Personal Property/Home Loans
- Mobile homes
- Boats
- Airplanes
Equipment Loans
- Farm equipment
- Heavy machinery
- Livestock trailers
- Livestock
- Farm assets
Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into what chattel loans are. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
How Much of a Down Payment Is Required for a Chattel Loan?
How much of a down payment is required for a chattel loan will depend on the specific terms agreed to with the financial institution. That said, it is possible for a chattel loan to have a down payment as low as 5%. That said, chattel loans are typically no longer than 20 years and their interest rates are often higher than a traditional mortgage or other financing options.
What Happens When You Default on a Chattel Mortgage?
What happens when you default on a chattel mortgage is very similar to what happens when you default on a traditional mortgage. The creditor that provides the chattel mortgage is legally permitted to take possession of the property financed through the chattel mortgage in order to repay the loan.
Are Chattel Loans Easier to Get?
Yes, chattel loans tend to be easier to get because they have a faster processing time than traditional mortgages and other financing terms. This is because chattel loans only take into consideration the purchase price of the asset being purchased, such as a piece of equipment or a home. So, they do not also take into consideration the value of underlying land or property as is the case when purchasing a home.
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