How does a chattel mortgage differ from a traditional mortgage?

A chattel mortgage is a type of loan specifically designed to secure personal property rather than real estate. Unlike a traditional mortgage, which is used to finance the purchase of real property such as land and buildings, a chattel mortgage applies to movable items, such as machinery, vehicles, or equipment. The personal property acts as collateral for the loan, allowing lenders to reclaim the asset in case of default.

This distinction is crucial because it highlights the focus of chattel mortgages on assets that can be physically moved or transferred, differentiating them from traditional mortgages that are tied to immovable property. Understanding this difference is important for individuals or businesses considering financing options for personal property versus real estate.