The main way a Chattel Mortgage differs from a Finance Lease is ownership of the asset.
With a Chattel Mortgage, the lender advances the borrower the money to buy the asset and registers a “mortgage” over the asset as security for the loan.
When the loan is fully repaid, the charge is removed, and the client has clear title to the asset.
How a Finance Lease is different from a Chattel Mortgage
With a Finance Lease, it is the Financier who owns the asset.
The client then “leases” or “hires” the asset from the Financier for a fixed monthly payment over a set period of time.
At the end of the contract the client usually has the option to purchase the asset for an agreed price.
Whilst at face value the products are similar, there are differences: