Israeli car owners, fleet owners and other operators of vehicles owe banks, credit card, and financing companies NIS 40 billion in funds that were used to finance vehicle purchases, the Bank of Israel said. The data comes from a new report on stability in the Israeli economy. While that sounds like a lot of money, the Bank said that it did not constitute a “structural threat” to the economy.
Many Israelis – both private and fleet owners – finance new car purchases, often through banks in financing arranged by dealers. The loans for those vehicles are largely secured by the vehicles themselves, with depreciation built in to the costs of the loan. The “danger” in such loans, the Bank said, would be a “sudden plummet in the price of used cars,” which could come about if the Knesset were to take steps to lower the cost of new cars by reducing import duties and purchase taxes.
According to the report, Israelis owe NIS 17 billion on their credit cards. Out of that figure, 37 percent of the debt was in revolving credit, where borrowers pay interest. The rest is owed on debit cards and in monthly interest-free payments (tashlumim). Altogether and taking into account all debts – including mortgage debt – Israelis owed in the first quarter of 2017 NIS 511 billion, NIS 7 billion more than in the last quarter of 2016. Of that, NIS 343 billion is mortgage debt.