Chattel MortgageCredit Repair Definition
A loan secured by movable personal property (chattel), such as vehicles, equipment, or manufactured homes.
Definition
A chattel mortgage is a type of loan used to finance the purchase of movable personal property, known as 'chattel.' Unlike a traditional mortgage which is secured by real estate (land and buildings), a chattel mortgage uses the purchased item itself—such as a vehicle, boat, heavy equipment, or manufactured home—as collateral. The lender holds a security interest (lien) on the chattel until the loan is fully repaid. If the borrower defaults, the lender can repossess the chattel to recover the outstanding debt. Chattel mortgages are common for financing assets that are tangible and movable but not considered real property.
Frequently Asked Questions
How is a chattel mortgage different from a traditional mortgage?
The main difference lies in the type of collateral. A traditional mortgage is secured by real property (land and buildings attached to it). A chattel mortgage is secured by movable personal property (chattel). This distinction affects the legal processes for foreclosure or repossession and may influence interest rates and loan terms.
What types of property are typically financed with chattel mortgages?
Chattel mortgages are commonly used for financing manufactured homes (mobile homes), recreational vehicles (RVs), boats, aircraft, heavy machinery, farm equipment, and business equipment.
Are interest rates higher for chattel mortgages?
Interest rates for chattel mortgages, particularly for manufactured homes, tend to be higher than traditional mortgage rates. This is because movable property is generally considered riskier collateral than real estate, as it can depreciate faster and is more susceptible to damage or relocation.
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