The full explanation
According to the CFPB, chattel loans generally have higher interest rates and fewer consumer protections than mortgages; for example, the federal RESPA law, which gives you the right to certain disclosures when you apply and close, protects only mortgage borrowers. In exchange, their origination costs are lower and they close faster. Some people choose them to avoid putting their land at risk if they stop paying.
An example
Pablo buys a manufactured home to place on a lot he rents. The seller offers him a chattel loan. Pablo gets offers from other lenders and compares the rate and fees.
You will see it in…
- Financing offers where manufactured homes are sold
- The home loan contract
- The home's title as personal property
