Introduction to Chattel
Any personal property that you own other than your owned land or house is considered to be Chattel. So, Chattel basically is any personal property that can be moved from one place to another. This can include jewellery, automobile, furniture, houseboat, etc.
Chattel can be borrowed or bought against chattel mortgages. Chattel mortgages are also used by many companies to buy properties by using equipment, automobiles or any other personal assets as collaterals.
Legal implications and rights towards chattel are different from those towards real estate; those towards real estate being more complicated, longer and harder to overturn than those towards chattel. Chattel property is also treated differently in terms of taxes than real property.
As opposed to real property, the value of chattel falls overtime, as you must have experienced with automobiles like cars or any other vehicle. The price of gold also keeps fluctuating which makes chattel a subject to depreciation. Whereas, the price of real property increases over time and can be increased even more with renovations of the property.
How does Chattel Work?
Chattel is any movable personal property, animate or inanimate which can be transferred from one place to another. So, the main difference between chattel and real estate is that real estate remains in a fixed position throughout, whereas chattel can be moved. This chattel can include vehicles, jewellery, furniture and any other movable assets..
The chattel is often used to buy property against chattel mortgages. In case the owner of the chattel falters in paying off the loan, they have to pay the penalty by selling off the chattel.
What is Chattel Mortgage?
Chattel mortgage is basically a loan that is extended to the owner of the chattel by keeping the chattel as an underlying asset. Here, the chattel can be any movable asset like a car or jewellery which can be used as a security for the loan.
Chattel mortgages often have a lower rate of interest as compared to the loans that are extended to real property and the payment structure is also flexible. Both these characteristics make chattel mortgages attractive to small companies and business owners.
As the chattel is used as a security for extending the loan, the chattel is held by the bank until the entire loan is paid off. In case the concerned individual or company fails to pay off the loan, they have to face a penalty by selling off the chattel.
