Last update - 00:00 13/06/2007
Direct Insurance enters the banking arena with car loans
By Ran Dagan
The Direct Insurance Company will begin competing with the banks in the retail credit business: The company announced yesterday that it would offer loans for purchasing automobiles.
The loans will be offered to anyone, whether a client of the company or not, for purchasing either new cars or used cars no older than 1999 models. The loans will be for up to NIS 120,000, with repayment in up to 60 monthly installments.
Vehicle financing activity is Direct Insurance's first step into retail credit, an area that to date has been considered the sole domain of banks. Insurance companies have customarily offered such financing only to businesses. The new credit activity will be conducted by a recently established company, Direct Financing, under the management of Eran Wolf, a former marketing and business development manager for Direct Insurance.
A glimpse of the competition that is likely to ensue followed immediately upon Direct Insurance's announcement, as Bank Hapoalim announced a new campaign to market vehicle loans as well. It will offer loans of up to NIS 150,000, as well as direct credit of up to NIS 80,000 available within 24 hours; both loans are repayable in 60 monthly installments.
Direct Insurance chose the vehicle sector for its first step into retail credit because of its typically low financing levels. Only a few billion shekels are currently available on the market for vehicle financing, and this sector is therefore expected to attract attention from the banks as well.
Loans will be provided through the company's call centers, and interest rates will be based on a questionnaire filled out by customers. After a loan is approved, the money will be transferred to the motor vehicle dealer for purchase of a new car, or by check to the loan recipient for used cars.