A chattel mortgage is a loan to buy a personal item where the item is security for the loan. Originating in Anglo-Saxon law, the term chattel refers to movable personal property. This chattel mortgage has been used for vehicles, ships and aircraft. Under this chattel mortgage, the debtor takes out a loan for the property. The legal ownership of the chattel is transferred to the financial institution making the loan. The debtor receives the legal title once the debt repayment schedule is completed. Legal title must be transferred to the lender to qualify as a chattel mortgage. American law defines chattel mortgage under secured transactions in Article 9 of the Uniform Commercial Code. This is similar to collateral for lenders. Lenders are securing mortgages that give them a more clear legal ownership of a property.
