8 May 2018

Chattel Mortgage

Finance feed by:

CA Nisha Bagla
B.com (Hons),CA
CA in Practice    •    15 Year 8 Month  experience

Chattel mortgage is a loan extended to an individual or a company on a movable property. Here, the ‘chattel’ or the movable personal property which could be a car or a mobile home can be used as a security to extend the loan.

Chattel mortgages are secured loans attached to a personal movable property which is used to extend the loan to an individual or a business owner. In the traditional setup, a loan is given to a person based on the security he/she provides which is usually in the form of land, house, etc.

Chattel mortgage generally carries a lower rate of interest, flexible payment structure, and thus proves to be better especially for business owners.

But with chattel mortgage, a loan is extended to a borrower secured by ‘chattel’, in which the bank holds a lien until the entire amount is repaid. Usually, the rate of interest levied on such mortgages is lower.

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