Financing a car in Israel: the steps and balloon loans explained

You’ve chosen a car and want to pay monthly. Here is how it works in practice, what lenders ask for, and how to read a balloon loan offer without nasty surprises.

The five steps of financing

1. 1
   Simulationthe monthly payment by term and down payment
2. 2
   ApplicationID, income, bank statements
3. 3
   Approvalthe lender’s answer and terms
4. 4
   Signingloan contract and purchase order
5. 5
   Deliverycar registered in your name

The simulation helps you choose the term and the down payment. The application then goes to a lender: a bank or a licensed credit company (in Israel, lending money without a licence is prohibited). When the lender approves, it sends you its terms. You sign the loan contract and the car’s purchase order, then the car is registered in your name and delivered.

The Fair Credit Law requires a written contract, given to you before signing with time to read it. It must state the amount lent, the annual rate, the real cost of the loan (interest and fees), the late-payment rate and the repayment schedule.

The term changes everything

The longer the loan, the lower the monthly payment and the higher the total cost. An example with a standard loan on a car from our catalogue:

3,139 ₪/month*60 months

2,333 ₪/month*84 months

2,028 ₪/month*99 months

Total cost over 60 months188,340 ₪

Total cost over 84 months195,972 ₪

Total cost over 99 months200,772 ₪

Price of the carInterest

* Example loans at 4.13% with no down payment, subject to approval. Catalogue prices as of 28 October 2026.

Balloon loans, explained with an example

With a balloon loan (halva’at balon), you only repay part of the price over the term of the loan. The rest, the “balloon”, is due in one go at the end. The monthly payment is therefore lower than with a standard loan over the same term.

A theoretical example, for ₪100,000 borrowed over 60 months at an example rate of 5% a year:

	Standard loan	Balloon loan (50% at the end)
Monthly payment	₪1,887	₪1,152
Final payment	None	₪50,000
Total paid	₪113,220	₪119,120

A balloon loan costs a little more in total, because half the sum stays owed for longer. In return, it leaves you more room each month.

What to do with the balloon at the end?

At the end of the loan, there are usually three options:

• Pay the balloon from your savings: the car is then entirely yours.
• Refinance it with a new loan, if the lender agrees.
• Sell or trade in the car: its value goes towards repaying the balloon. If it is worth less than the balloon, you pay the difference; if it is worth more, the difference is yours.

A down payment: useful, not compulsory

A down payment reduces the amount borrowed, and so the monthly payment and the interest. Some lenders finance with no down payment, depending on the application. For an oleh, the tax benefit already lowers the price of the car, and therefore the amount to finance.

What the lender looks at

Above all, the lender checks that the monthly payment stays reasonable compared with your income, and looks at your credit history in Israel, held in the Bank of Israel’s register since 2019. A newly arrived oleh has no history yet: some banks will then consider their income in France. We explain this in our article on getting a car loan with no Israeli credit history.

Frequently asked questions

Sources: Fair Credit Law (sections 2 and 3, cap on the real cost); Bank of Israel, decision of 21 October 2026; 2016 Regulated Financial Services Law (lender licensing); Bank of Israel, credit data register. Balloon loan example: a theoretical calculation, not an offer.