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Hire Purchase vs Chattel Mortgage Calculator
Comparison Results:
Hire Purchase Monthly Repayment: $0.00
Chattel Mortgage Monthly Repayment: $0.00
Hire purchase total, excluding deposit and fees: $0.00
Chattel mortgage total, excluding deposit and fees: $0.00
Difference in calculated repayment totals: $0.00
On a small screen, scroll the table sideways to see every column.
| Feature | Hire purchase | Chattel mortgage |
|---|---|---|
| Ownership | Transfers under the agreement after the required payments and conditions | Borrower owns the purchased asset, subject to the lender’s security |
| What this tool compares | Monthly payments at the entered HP rate | Monthly payments at the entered chattel mortgage rate |
| Shared assumptions | Same price, deposit, term and balloon | Same price, deposit, term and balloon |
| What needs separate review | Fees, tax treatment, title transfer and contract terms | Fees, tax treatment, security and contract terms |
What the calculation holds constant
Both options use equal end-of-month payments, a constant nominal annual rate divided into monthly periods and a final balloon. The formula accounts for interest on the balloon while it remains outstanding. A zero-rate case is supported.
The term can be entered as a fraction of a year when it produces a whole number of months. For example, 2.5 years means 30 payments. The calculation excludes deposits from the displayed repayment totals; add the common deposit when comparing total cash outlay.
Read the difference as a rate comparison
Equal rates produce equal repayments here because the price, deposit, term, balloon and formula are the same. The tool does not assign a built-in cost advantage to either product name.
A lower result shows the effect of the lower entered rate under those assumptions. For illustration, if one schedule totals $600 less but that offer carries $900 more in setup charges, including those charges reverses the apparent saving by $300, before other differences. Those figures demonstrate the comparison; they are not lender prices.
Request complete written offers and place excluded fees beside the results. A like-for-like calculator result is useful only when the contract comparison is also made on a clear basis.
Use a matching-rate example to check your inputs
With an illustrative $50,000 purchase, $10,000 deposit, four-year term, $10,000 balloon and 8% entered for both products, both monthly estimates are about $799.05. Each repayment total is about $48,354.61 including the balloon and excluding the common deposit and fees. Matching results are expected: the tool uses the same cash-payment formula.
Now change only one rate to see its effect. Keep a record of both rates and all shared inputs with the results. If the real offers have different amounts financed, balloons or payment dates, the displayed difference no longer describes the entire comparison.
A zero rate is supported, and a fractional term such as 1.5 years means 18 months. Neither input implies that a lender offers those terms. The balloon must fit within the financed amount, and the deposit must leave a positive amount to finance.
Add the contract differences beside the calculation
For each offer, record upfront cash, setup fees, ongoing charges, the final payment and what the business owns at the end. Keep tax assumptions outside the calculator and have them checked against the agreement. A deduction is not the same as a cash refund of the whole payment.
If you plan to retain the asset after the term, identify any payment or condition needed to do so. If you plan to sell it earlier, use a dated payout quote. This tool has no early-exit calculation and does not tell you what a lender would accept to end either agreement halfway through.
Use consistent figures
Check whether the asset price and financed amount in each offer are expressed on the same GST basis. Do not compare a factor rate with an annual reducing-balance interest rate. If one quote has a different deposit or balloon, request a comparable schedule or model it separately.
For a business planning to sell the asset early, the contractual payout figure matters more than a full-term estimate. Ask each financier for the calculation method and applicable charges.
Ownership and tax require a separate decision
Use the GST and ownership table below alongside the repayment results. Have the agreement and your tax eligibility checked before treating a deduction or credit as a saving.
When the quoted rates differ by one percentage point
Keep the illustrative $50,000 asset, $10,000 deposit, four years and $10,000 balloon, then enter 8% for hire purchase and 9% for chattel mortgage. The estimates become $799.05 and $821.55 a month. Finance repayments including the balloon total $48,354.61 and $49,434.46, a difference of $1,079.85 before fees and the common deposit.
This is an SMB Loan calculation using assumed rates, not evidence that hire purchase is cheaper. Reversing the rates reverses the result. Compare setup and ongoing fees before deciding whether a quoted interest-rate advantage survives the full contract.
GST and ownership: how the two contracts differ
| Question | Hire purchase | Chattel mortgage |
|---|---|---|
| Ownership at the start | Title generally remains with the financier until the purchase condition or final payment is met. | The purchaser takes title, with a security interest held by the lender. |
| GST credit timing | Post-2012 rules can allow an eligible cash-basis purchaser to attribute credits using non-cash rules. It is not correct to assume credits arise only as each instalment is paid. | Eligible purchase credits follow the acquisition and attribution rules, including payment/invoice evidence. Loan interest is not the vehicle purchase GST. |
| Depreciation | The income-tax holder rules can treat the hirer as holding the asset, despite legal title. Business use and the agreement matter. | The owner may claim applicable decline-in-value deductions for taxable use, subject to the current rules and limits. |
| Balloon | A remaining purchase payment must be budgeted under the agreement. | Remaining principal must be repaid, refinanced or met from a sale; future approval and resale value are not guaranteed. |
Sources checked on 10 October 2026: ATO GSTR 2000/29, hire-purchase attribution rules; ATO financial-services questions, chattel mortgages; and ATO guidance on who holds a depreciating asset. These explain the structure; confirm current eligibility, asset limits and the treatment of your contract with your accountant. The calculator does not calculate tax credits or deductions.
Sources and further reading
Disclaimer
Please note that we do not offer finance ourselves. The information provided, including the calculator, is for informational purposes only to assist you in understanding potential financial commitments associated with Hire Purchase and Chattel Mortgage agreements.
We strive to ensure the accuracy of the calculator and the accompanying information; however, we recommend verifying all estimates with financial professionals before making any decisions.