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Israel Car Loan Calculator

Calculate monthly car loan payments in Israel. Enter vehicle price, down payment, annual interest rate, and term. Note: Israeli car prices include approximately 92 percent import duty plus 17 percent VAT. Results in ILS.

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Written by PennyCompass Team

Enter the vehicle price, down payment, annual interest rate, and loan term to calculate your monthly car loan payment and total cost in Israel. Car prices in Israel include high import duties plus 17 percent VAT.

Israeli car prices include approx. 83 to 100 percent purchase tax plus 17 percent VAT.

Typical Israeli car loan rates: 3 to 8 percent annually. Terms of 36 to 84 months are common.

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How car loan payments are calculated in Israel

A car loan in Israel works the same way as any fixed amortisation loan. The loan amount is the vehicle price minus the down payment. The monthly payment is calculated using the PMT formula based on the loan amount, monthly interest rate (annual rate divided by 12), and loan term in months. Each payment covers monthly interest on the outstanding balance plus a portion of the principal. Over time the interest portion shrinks and the principal portion grows. The total interest cost is the sum of all interest paid across the full term.

Israeli car loans are offered by banks, car dealers (often through captive finance companies), and leasing companies. Direct bank loans and personal loans from your salary account sometimes offer lower rates than dealer finance. Compare the Sheur Rishoni across offers. Some banks require the car as collateral; others issue a standard personal loan that happens to be used for a vehicle. The collateral arrangement may offer a lower rate but gives the bank the right to repossess the vehicle in case of default.

The real cost of car ownership in Israel

The monthly loan payment is only part of the total car ownership cost in Israel. Add mandatory third-party insurance (Bituach Chova) at roughly 100 to 200 ILS per month, comprehensive insurance at 250 to 700 ILS per month depending on vehicle value and driver profile, fuel at roughly 1,000 to 1,500 ILS per month for average use, annual licensing tax, and routine maintenance. For a 150,000 ILS vehicle with a 60-month loan, the monthly loan payment is around 2,360 ILS. Add running costs and total car expenses can easily reach 4,000 to 5,000 ILS per month. This is why public transport or carpool arrangements are financially attractive for many urban Israelis.

Electric vehicles and purchase tax exemptions in Israel

Israel has aggressively promoted electric vehicle (EV) adoption through purchase tax reductions. As of 2025, many battery electric vehicles (BEVs) are exempt from or significantly reduced in purchase tax, making them far more competitively priced relative to petrol equivalents than in most countries. A family EV that might cost 200,000 ILS as a petrol vehicle could cost 130,000 to 160,000 ILS in its electric version after the purchase tax differential. Combined with lower fuel costs (electricity vs petrol) and lower maintenance requirements, an EV can significantly reduce the total 5-year cost of car ownership in Israel. Use this calculator to compare loan scenarios for petrol versus electric options.

Frequently asked questions

Why are cars so expensive in Israel?
New cars in Israel are subject to a purchase tax (Mas Rechisha) that starts at approximately 83 percent for standard passenger vehicles and can reach over 100 percent for larger or more powerful cars, in addition to 17 percent VAT. This makes Israel one of the most expensive countries in the world to buy a new car relative to average income. A car that retails for 20,000 euros in Europe might cost 180,000 to 220,000 ILS in Israel after all taxes. Used car prices are similarly elevated because the high new car prices set the benchmark for the entire market.
What interest rates do Israeli banks offer on car loans in 2025?
Car loan rates in Israel are typically between 3 and 8 percent annually for customers with good credit histories. Some banks offer promotional rates for specific vehicle brands or dealers. The rate depends on the loan term, loan-to-value ratio, and your income and credit profile. Car dealer financing may be available at lower headline rates but sometimes includes fees or insurance requirements that increase the effective cost. Always compare the Sheur Rishoni (effective annual rate) across options.
Should I buy a new or used car in Israel?
Used cars in Israel retain their value well because the high new car taxes compress the price gap between new and used vehicles. A three-year-old car with 60,000 kilometres might sell for 70 to 80 percent of its original price, whereas in most European countries a similar car would be worth 40 to 55 percent. This means used car buyers get less of a bargain than in other markets. Electric vehicles (EVs) in Israel receive purchase tax exemptions or significant reductions, making them much more price-competitive relative to traditional combustion engine vehicles.
What ongoing costs should I budget for when owning a car in Israel?
Beyond the loan payment, Israeli car ownership costs include: mandatory third-party insurance (Bituach Chova), which runs approximately 1,200 to 2,500 ILS per year for most cars; comprehensive insurance (Bituach Matsraf), which adds 3,000 to 8,000 ILS per year depending on car value and driver profile; annual vehicle licensing tax (Teudat Rishot); fuel at approximately 7 to 8 ILS per litre for 95-octane petrol; and routine maintenance. Total running costs for a mid-range car often reach 1,500 to 3,000 ILS per month on top of the loan payment.

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