More than a fifth of all cars on Israel’s roads were bought with a car loan that is still outstanding, according to figures obtained by TheMarker – and the trend of buying a car with borrowed money is growing. Some 726,000, or 21% of the 3.44 million vehicles registered with the Transportation Ministry’s Licensing Department still carried a loan still being repaid. Among cars registered in 2016, the figure was 52%, or 176,159 cars.
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Lending has enabled more and more Israelis to buy a car, with the number of new vehicles registered on Israeli roads up 12.6% last year to a record 287,000.
“More than half the new vehicles in Israel have been bought with borrowed money, so it’s no surprise that the roads are clogged,” Transportation Ministry Director General Keren Terner told Knesset lawmakers on Monday. “There’s been a big increase in lending, among other reasons because of cheap financing – we need to get an understanding of what this will mean in the future.”
The figures illustrate the extent of Israel growing car-loan segment. The Bank of Israel said last year that loans outstanding for car purchases had reached 9.2 billion shekels ($2.4 billion) at the end of June.
But industry sources said the figure was in fact a lot bigger. Many general-purpose consumer loans are used to finance buying a car, and increasingly Israelis are leasing cars financed with loans from leasing companies. But the financing for the leasing companies came from bank loans, which isn’t reflected in the 9.2-billion-shekel figures.