What Is Chattel Mortgage?
The Chattel Mortgage is entirely different than the other types of mortgages. Unlike other mortgages where the mortgage instrument is non-movable the chattel mortgage relies on the movable properties like cars, mobile homes, yacht etc. A person can use these assets as security for loans.
Definition of Chattel Mortgage
This type of mortgage is very different than conventional mortgages. For example, in a traditional mortgage, the lender holds a lien against the mortgaged property which works as a security for the loan. But in a chattel mortgage, the borrower must transfer the ownership of the property to the lender which h/she will get back after paying back the entire amount of loan.
Chattel mortgages are very widely used by the business owners who generally use the mortgage amount to buy new equipment. A Chattel mortgage has a very low rate of interest comparing with the other types of mortgages which is another reason for its popularity. Plus, the loan process is very simple for this type of mortgages you just need to have the right document for your chatter property.
In the US the chattel mortgage is a very popular practice among the people who use their mobile homes and cars to borrow money for the bank. Another significance of a chattel mortgage is that the property is moveable and can be easily sold in the case of a default situation. So, the banks don’t usually take much time to grant this kind of loan.
So, in above we have briefly discussed the idea of what is chattel mortgage with its complete definition which is enough to give you the complete knowledge about it.