Management Notes

Reference Notes for Management

Chattel Mortgage – Meaning and Key Benefits | Car and Equipment Loans

Chattel Mortgage 

Chattel Mortgage 

Meaning of Chattel Mortgage

A chattel mortgage is a method of obtaining funds by pledging specifically identified personal properties or inventories. Under the chattel mortgage method, inventories are identified by serial number or by some specific character. Those pledged inventories are owned and hold by the borrower but the lender has full control over them. Inventories cannot be sold without the consent of the lender. Firms with rapid turnover may face the problem of identification of that particular inventory.

So, chattel mortgages are well suited for certain finished goods inventories of capital goods such as machine tools. As the name suggests, a chattel mortgage is a finance agreement that allows a borrower to receive funds for the purchase of an asset. The lender accepts that financed asset as collateral for the loan.

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