As with our explanation of chattel, the use of the term mortgage in relation to business vehicle finance can be confusing. Most people associate mortgages with home loans and that tends to be the primary use of the term in Australian finance. In regard to Chattel Mortgage as a type of vehicle finance, the mortgage is the debt instrument or specifically the loan taken out to buy the car.
The mortgage is taken, or provided by the lender, for the chattel, being the vehicle. So in simple terms, this may translate as – auto loan. The mortgage is simply another term for loan. Terms such as mortgage are often maintained for use in legal documents and contracts. The legal fraternity and parts of the finance industry still tend to use historic terminology in official contracts.