The Financial Guide to Buying or Leasing a Car in Israel

A car is a horrible asset, bleeds money, is dangerous, and causes trouble. But it is also liberating, convenient, and gives you more time in the day to spend on what matters.

One day we won’t need to own a car. A shared self-driving car will arrive at your doorstep within minutes and you’ll be able to sit back and work or watch a movie during your commute.

But, until then, we’ll have to do some number crunching. Let’s discover the most efficient way to get a car in Israel.

Consider not owning a car

Before diving in, think twice before committing to buy a car (or a 2nd car).

New cars are expensive

The heart of the market is now the 160K-185K ₪ range. An enormous amount of money for a vehicle:

Price Bracket (NIS)	Market Segment	Representative Models	Market Share
₪95k – ₪125k	Budget Entry	Kia Picanto, Hyundai i10, Suzuki Swift, Chery Tiggo 4 Pro (Petrol)	12%
₪130k – ₪155k	Supermini / Compact	Toyota Yaris, Mazda 2, Seat Ibiza, MG ZS (Petrol), Nissan Sentra	18%
₪160k – ₪185k	The “Heart” of the Market	Toyota Corolla (H), Hyundai Elantra (H), BYD Atto 3 (EV), Geely Geometry C (EV), Tesla Model 3 (Standard)	41%
₪190k – ₪230k	Family Crossovers / Premium	Chery Tiggo 8 Pro, Hyundai Tucson, Kia Sportage, Mazda CX-5, Tesla Model Y, Toyota RAV4	21%
₪240k – ₪400k+	Luxury & 7-Seaters	Volvo XC40, Zeekr 001, BMW X1, Audi Q3	8%

The total cost of second-hand car ownership

Buying second-hand is certainly cheaper, however the all-in cost of an average second-hand sedan is still about 2,750 ₪ per month (after all costs, including the cost of buying the car, are expressed monthly):

Expense	Amount (₪)
Car itself	850
Financing	250
Fuel	800
Insurance	450
Registration	150
Test	10
Annual service	80
Repairs	120
Parking & Tolls	40
Total	2,750

If you can do without the car and invest that money instead in the stock market, on average you would be half a million shekels richer in just 10 years.

Alternatives

Consider these alternatives before committing to buying a car, or a 2nd car:

• Public transport
• Scooters
• Taxis
• Car share services

But, assuming you need a car, read on!

Decision 1: Electric, Hybrid, or Petrol

We’ll tackle this question from a purely financial perspective and let others debate which option is best for the environment. We’ll also start by looking at new cars and tackle 2nd hand later on.

EV vs. HEV vs. PHEV

First some terminology:

• Electric (EV) – runs on a battery and can be charged at home, work, or at a charging station
• Hybrid (HEV) – braking charges a battery. Both the battery and petrol engine run the car. Reduces petrol use.
• Plug-in hybrid (PHEV) – Can be charged from an external power source. Often gives 30-100 km of battery powered driving, without using any petrol

Electric (EV) and hybrid cars now make up over 50% of new cars sold in Israel:

This isn’t surprising. All new cars are expensive in Israel, but new electric cars aren’t much more expensive than new petrol cars. After accounting for the savings in running costs, an electric or hybrid car starts to make sense.

Comparison

Here is a comparison of the cost of the 3 most popular crossovers in each category as of 2022. We have used 2022 cars so as to get an accurate sense of depreciation over the past 4 years. We are focusing on crossovers as they are by far the most popular car in Israel (90% of new EVs and 65% of new Petrol/Hybrid):

All in ₪	Cost (new in 2022)	Depreciation	Fuel	Maintenance	Registration & Test	Insurance	Monthly Total
Electric
Geely Geometry C	145,000	1,040	170	90	180	610	2,090 ₪
Tesla Model 3	208,000	1,400	180	70	330	670	2,650 ₪
BYD Atto 3	156,500	1,070	170	80	210	660	2,190 ₪
Hybrid
Toyota RAV4	196,000	830	486	180	240	630	2,360 ₪
Hyundai Kona	150,000	960	810	160	180	470	2,280 ₪
Toyota C-HR	156,000	790	460	150	210	530	2,100 ₪
Petrol
Hyundai Tucson	163,000	940	970	180	240	510	2,830 ₪
Kia Sportage	170,000	960	980	190	210	380	2,720 ₪
Mazda CX-5	172,000	830	1,020	180	240	450	2,720 ₪

A number of sources were used to compile this data, including Carzone, iCar, and Gemini. Fuel estimates are based on 15,000km per year.

Electric cars have not maintained their value as well, due to the sheer pace of technology development. However the fuel and maintenance saving outweighs the depreciation hit when driving 15,000km.

What about if you drive less or more?

Car	5,000 km/yr	10,000 km/yr	20,000 km/yr	30,000 km/yr
Electric (BYD Atto 3)	2,080 ₪	2,140 ₪	2,250 ₪	2,360 ₪
Hybrid (Toyota C-HR)	1,830 ₪	1,980 ₪	2,290 ₪	2,600 ₪
Petrol (Hyundai Tucson)	2,030 ₪	2,370 ₪	3,050 ₪	3,730 ₪

Total monthly cost

Conclusion

If you are buying a new car, the financial decision between petrol, hybrid, and electric will largely depend on how far you expect to drive per year.

All are good options at 5,000 km per year. Lean towards hybrid or electric from 10,000-20,000 km per year. And lean towards electric from 30,000 km per year.

Other non-financial considerations that you should take into account include charging infrastructure, range anxiety, and resale uncertainty.

And don’t forget, you can use our free Car Purchase Calculator to compare the true all-in monthly cost of different car options side-by-side.

Decision 2: New or used

New cars lose a significant percentage of their value in the first few years:

As a result, the financially smart move is usually to buy second hand. Let somebody else pay the new-car premium.

Used

Take a petrol car that costs 160,000 ₪ new. This is how much it drops in value per year and per month:

Year	Current Value (₪)	Loss This Year (₪)	Loss Per Month (₪)
0	160,000
1	131,200	28,800	2,400
2	113,440	17,760	1,480
3	99,840	13,600	1,133
4	89,920	9,920	827
5	81,760	8,160	680
6	74,880	6,880	573
7	68,800	6,080	507
8	63,680	5,120	427
9	59,200	4,480	373
10	55,040	4,160	347
11	51,520	3,520	293
12	48,320	3,200	267
13	45,440	2,880	240
14	43,040	2,400	200
15	40,800	2,240	187

If you buy a new car every 3 years, your average annual car cost (car alone, not including running costs), is 20,000 ₪. If you keep that car for 10 years and then sell it, the cost drops to 10,000 ₪ per year.

On the other hand, if you buy a 4-year-old car and keep it for 3 years, your annual cost is 7,000 ₪. Keep it for 10 years, the cost drops to 5,000 ₪ per year.

That is a potential saving of 15,000 ₪ per year!

If you can save 15,000 ₪ on your car each year, and invest that sum at an 8% return over 20 years, you will have over 700,000 ₪. Driving an older car can make a big difference to your financial future.

Second-hand electric

If we combine the conclusions so far, buying a second-hand electric or hybrid starts to look like the smart move for many people.

For the first time, there’s a real second-hand EV market in Israel. 2022 vehicles are rolling off leases and hitting the used market, giving buyers a genuine alternative to new.

Second-hand EVs are often well priced. Part of what makes second-hand EVs so cheap is tech FOMO. The market discounts older models heavily simply because newer ones exist — not because the car is worn out. For the right buyer, that’s an opportunity.

Recent research also shows that the fear around electric battery longevity may have been overblown. Batteries are expected to retain 70-75% of their capacity after 15 years. And for those few who will need a battery replacement, the cost is expected to drop to around 15,000-20,000 ₪ by 2030.

The time is ripe to consider a second-hand EV. If you don’t have the charging infrastructure for an electric car, consider a hybrid. And if you don’t drive much, second-hand petrol cars are still a great option.

Buying new with the Aliya benefit

Perhaps new olim should prefer to buy a new car and take advantage of the oleh car tax discount?

Don’t get too excited. As of 2026, the oleh benefit only gives about a 4% discount on a new electric car and a 10% discount on hybrid options. The discount can reach 20%, but only for the most highly polluting cars.

The way that the system works is as follows:

• Cars usually bear an 83% tax rate, plus 18% VAT.
• This 83% tax is reduced if the car is “green” / fuel efficient.
• Olim only have to pay a 50% tax rate, plus 18% VAT
• Olim do not get any “green” reduction.
• Therefore, the difference between the olim rate of 50% and the regular rate, after green discounts, is not that large for fuel efficient cars.

By way of example, let’s revisit our 160,000 ₪ car above. After a 16% oleh discount, the annual car cost over the first 3 years drops from 20,000 ILS annually without the discount to 15,000 ILS annually with it. Over 10 years it drops from 10,000 ILS to 9,000 ILS. Buying a second-hand car is still cheaper, by quite a margin, than buying new with the oleh discount.

Finally, if you decide to buy a new car with the oleh discount, remember that there are restrictions on selling the car to a non-Oleh for 4 years and limitations on who can drive the car.

Age

If you are buying a second hand car, should it be 2, 4, 6, 8, or 10 years old?

The depreciation table above can help us reach an answer.

Cars lose the most value in the first 3 years. In addition, the leasing culture in Israel ensures there will always be significant supply of 3-year old cars, keeping the price low.

Beyond 3-4 years, we’ll need to balance the annual drop in car value against anticipated maintenance costs.

For example, if you buy a 5-year-old car and hold it for 5 years, the annual drop in value will be a little over 5000 ₪ per year. This is your annual cost of owning the car. This compares to a value drop of almost 3000 ₪ per year for a 10-year-old car, held for 5 years. The older car “costs” 2000 ₪ less per year. If you anticipate that the maintenance costs of the older car will be at least 2000 ₪ higher per year, then it likely makes sense to go with the newer car.

It seems to me that the sweet spot is around 3-6 years old. Please share your thoughts and experience in the comments below!

When to sell?

From a financial perspective it makes sense to keep driving the car until the depreciation per year + average maintenance costs for the current car exceed the depreciation per year + average maintenance costs per year for the replacement car.

For example, imagine you’re facing a 5000 ₪ repair cost on a 10-year-old car and you estimate the maintenance costs should average 2,000 ₪ per year for the next 2 years. This gives a yearly average across the 3 years of 3,000 ₪. According to the depreciation table above, this car is dropping in value by about 4,000 ₪ per year. That gives a total of 7,000 ₪.

Compare this to a 4-year old car that drops in value by 10,000 ₪ per year and has 1,000 ₪ maintenance costs. Total of 11,000 ₪.

7,000 ₪ is cheaper than 11,000 ₪. In most cases, if you’re happy enough with the comfort and safety of your current car, drive it into the ground.

How to buy used

There are several ways to buy a second-hand car. The most popular ones include:

• Ex-lease from a leasing agency
• A private car agent/broker*
• Directly from private sellers off sites such as Yad2

*Ensure you do due diligence on your car agent. A car agent servicing the Anglo community was recently arrested for fraud relating to second-hand car deals. Typically you should pay the seller directly for the car and pay the agent separately for their service.

Regardless of how you find the car, it is crucial to understand the car’s history, take it for a test drive, and conduct a full pre-purchase inspection with a mechanic.

When buying second hand, we always have to weigh up the potential risks against the potential gains. Even if you do everything right, there is a chance of getting stuck with a dud. On the other hand, you may just discover that gem that becomes your best friend for 20 years.

Conclusion

Buy second hand. Your pocket will thank you.

Decision 3: Buy or lease

Is leasing better than buying?

Types of leasing

In Israel there are two main types of leasing:

1. Operating lease (ליסינג תפעולי)
2. Finance lease (ליסינג מימוני)

An operating lease is commonly used by companies wishing to provide an employee with a car. The monthly cost is quite high, but includes maintenance, insurance, test, and registration. Typically you drive the car for 3 years, and then return it. An operating lease is also available to private individuals through some leasing companies, and is best seen as a luxury option due to the convenience and high cost.

The more common private leasing option is a finance lease. In this sense, leasing is just another form of buying a new car with the added costs of financing. However, the financing structure is designed to both hide how expensive the car is and lock you into a cycle of trading up to a new car every 3 years.

The financing has three components:

1. Down payment – A small amount of cash upfront
2. Monthly payments – Covering interest and some of the loan principal
3. Balloon – A large lump sum left owing at the end

Leases are devious

This payment structure takes advantage of a well-documented cognitive bias called payment partitioning. When a total price is broken into smaller periodic payments, people instinctively evaluate affordability based on the monthly number alone, ignoring the full cost.

By pushing a large chunk of the car’s cost to the end of the term, the dealer can dramatically lower the monthly payment, making the deal feel cheap. And when the balloon comes due three years later, most people don’t have ₪80,000-100,000 sitting around, so they roll it into a new lease on a new car.

This is by design. The leasing company is financing your habit of always driving a new car. Every three years you hand back an asset you’ve been paying for, walk away with nothing, and sign up to do it again.

You can use our free Car Purchase Calculator to analyze leasing financing, understand the implied rate of interest in the deal, and compare against a bank loan.

At the end of the day, leasing is expensive but if you want to pay for a new car every 3 years, it is worth considering.

Otherwise, consider buying. Leasing costs the same as a new car plus financing costs. Buying is the smarter financial move.

Leasing with teenagers

Insurance for teenagers can be really expensive. Some families choose to lease during the teen years in order to avoid this jump in insurance cost.

Does this approach make sense?

First you have to check if the leasing company restricts the age or experience of the driver. Many companies charge an additional fee to include a young driver, even on operating leases.

Even if they don’t charge an additional fee, it is still likely to be cheaper to buy a second-hand car and pay for insurance.

Let’s start by examining how much it costs to insure new and young drivers. There are 3 main models that exist:

1. Full policy – Approx. 4000 ₪ per year additional cost
2. Pay per day – 37 ₪ per day that the young driver wants to drive
3. Pay per km – 1 ₪ per km the young driver drives

Assuming 30km of driving per week, this puts the added insurance cost at 1500 ₪ per year with option 3, up to 4,000 ₪ per year with option 1.

We’ve already seen that buying a new car every 3 years will cost about 13,000 ₪ per year more than buying a 4-year-old car every 3 years. The operating and financing costs of a lease further increase this gap.

It is cheaper to pay for the insurance.

Leasing as a small business owner

Is there a special tax benefit for small business owners who lease rather than buy?

For an Atzmai there is no tax difference between leasing and buying. When you buy or take a finance lease, the cost is depreciated over 7 years and 45% of that cost is recognized as a tax deduction. When you take an operating lease, the same 45% of the cost is recognized as a tax deduction.

Since there is no tax difference, your decision should be solely based on the considerations we discussed above.

Leasing for new olim who can’t get a loan

If you are a new oleh and don’t have the credit history to receive a regular bank loan, you may feel like leasing is the only option.

Here are some alternatives:

1. Delay buying your target car until you build up a credit score. Instead:
   • Buy a very cheap car with cash and drive it for just a year or two
   • Try to get by without a car
   • Rent a car for a year (though this can be expensive. It’s worth doing an all-in comparison of costs.)
2. Consider taking a loan from the country you came from. You can then buy a forward contract on the currency risk in order to remove your currency exposure.

Decision 4: Financing

Assuming you have decided to buy a car, how will you pay for it?

Pay cash

Paying cash upfront is a great option. For most families this will require planning a few years in advance. For example, you can set up an automated savings plan with 1,000 ₪ per month and build up enough to replace your car after 5-6 years (after accounting for the proceeds from selling the old car).

By paying in advance for your consumption you are taking a clear stance on financial health. You are refusing to let debt dictate your lifestyle choices. Debt can put you in a precarious financial position – if you lose your job, debt can compound quickly.

The one question worth examining is the opportunity cost. Could your money work harder elsewhere?

If you could borrow at 3% and make a 10% return, there may be a strong argument for disciplined savers to use reasonable amounts of debt. But in 2026 you will likely take a car loan at 6-7% if you have a great credit score. Compare that to an average expected 8% return in the stock market (7% after taxes) and debt no longer seems so attractive.

Take a loan

If you decide to or need to take a loan, here are some important tips:

• Minimize the loan by paying a portion in cash.
• Avoid balloon loans, where a large portion of the loan is payable as a lump sum at the end. See more above.
• Keep the loan as short as possible. 3 years if possible. 5 years at the most. The goal is to never be paying off one car loan while taking out another.
• Avoid inflation linked loans.
• Be smart about where you take the loan from. The first place to check is your Keren Hishtalmut and Pension fund. They often offer loans at the Prime rate (5.5% in mid 2026). Otherwise get quotes from 2 or 3 banks, in addition to the dealer.
• Make sure you’re comparing apples to apples. The same loan amount over the same period of time, with no balloon at the end. Not inflation linked. Compare the interest rate and monthly payment amount.
• Make sure there is no significant penalty for paying the loan off early.

Decision 5: Which car?

We’ve reached one of the most important questions, which happens to be the question I’m least qualified to answer.

With so many cars on the market, it is difficult to know which to pick.

All I can propose is to use the structure we have used throughout this guide, to assess the all-in monthly cost of one car vs. another. This should give you a standardized measure to compare the relative benefits of factors such as maintenance, fuel, and insurance costs. It also provides a measure of reliability by projecting future sale price in the depreciation calculation.

Here are the costs to include in your calculation:

Factor	How to estimate
Depreciation	(Purchase price – Future sale price) / (Years until sale * 12)
Financing cost	Total interest cost / Months of intended ownership.
Maintenance & repairs	Speak to your mechanic and search carzone.co.il
Insurance	Speak to your insurance agent or search car.cma.gov.il for Chova and carzone.co.il for Mekif
Registration	Search carzone.co.il
Fuel/Electricity	Use published fuel efficiency and compare to carzone.co.il

Adding those monthly amounts together should give a single number that will be helpful in comparing options. If you want, our Car Purchase Calculator can do it for you.

Conclusions

A car may be the second most expensive thing you ever buy. You will buy many in your lifetime. Being smart about it can save hundreds of thousands of shekels.

Here are my top tips:

1. Try to go as long as possible without a car / without a 2nd car. You’ll save a lot of money.
2. Don’t buy new, don’t lease, and don’t take a balloon loan.
3. When comparing car options, work out the total monthly expected cost for each. Be sure to include depreciation, financing, maintenance, insurance, registration, and fuel.
4. If you drive 20,000 km or more per year, electric, or at least hybrid, is a must.
5. Second-hand electric is even worth considering for drivers that do as little as 5000 km per year. But run the math to compare.
6. Start saving today for your next car. Saving in advance will reduce your reliance on debt. It’s financially healthy to pay upfront.

These tips should help you make a wise financial decision on your own. However, if you have gathered quotes and are struggling to decide, feel free to reach out for a financial consultation session.

Good luck with your car purchase and safe driving!

Bonus: 7-8 Seater

Having a 4th child often comes with getting a bigger car. Larger cars can guzzle fuel and there aren’t too many second-hand electric or PHEV options on the market yet.

If you will be doing mostly local driving, a second-hand petrol car will likely be cheapest for you.

But if you are doing 15,000-20,000 km per year it may be worth running the numbers on a new electric or PHEV at 200,000 ₪.

In order to give you some direction, here is a summary of the research I did in 2026.

Model	Category	Cost New	Cost 5Y Old	Fuel/Month	Other Pros (+) / Cons (-)
Citroën C3 Aircross	5+2	~144,990	N/A	~550	(+) Softest suspension/comfort. (-) Near-zero trunk.
Opel Frontera	5+2	~157,000	N/A	~790	(+) Simple, honest tech. (-) Very basic interior.
Dacia Jogger	5+2	~175,000	N/A	~520	(+) Exceptional fuel economy. (-) Low safety rating.
Chery Tiggo 8 Pro	5+2	~185,000	~105k	~1,036	(+) High-tech “luxury” cabin. (-) Thirsty engine.
Chery Tiggo 8 PHEV	5+2	~199,000	N/A	~410	(+) Daily electric commute. (-) Tiny trunk when full.
Maxus MIFA 7 (EV)	7-Seater	~205,000	N/A	~215	(+) Sliding doors; EV savings. (-) Boxy styling.
Nissan X-Trail	5+2	~210,000	~118k	~750	(+) Smooth e-Power drive. (-) Very tight 3rd row.
Mitsubishi Outlander	5+2	~215,000	~115k	~860	(+) Reliability & resale king. (-) Dated engine feel.
Peugeot 5008	5+2	~225,000	~115k	~780	(+) 3 separate middle seats. (-) High maintenance.
Jaecoo 8 (PHEV)	Mid-Size 7	~230,000	N/A	~340	(+) 134km EV range; 600hp. (-) New brand.
Skoda Kodiaq	5+2	~235,000	~125k	~810	(+) Best all-rounder driving. (-) Expensive parts.
Chery Tiggo 9 PHEV	Mid-Size 7	~244,000	N/A	~350	(+) AWD; massive power. (-) Large footprint.
Kia Sorento (Hybrid)	Mid-Size 7	~255,000	~155k	~645	(+) Top-tier safety. (-) Long wait lists.
Kia Carnival	8-Seater	~275,000	~145k	~1,215	(+) King of family space. (-) High fuel bill.
Xpeng G9 (EV)	Mid-Size 7	~285,000	N/A	~220	(+) Ultra-fast charging. (-) New brand resale?
Subaru Evoltis	8-Seater	~299,000	~165k	~1,250	(+) Best AWD/Safety. (-) Highest fuel costs.
Toyota Highlander	Mid-Size 7	~315,000	~220k	~690	(+) Unbeatable resale value. (-) Narrow 3rd row.
Hyundai Santa Fe	7-Seater	~319,000	~140k	~700	(+) Boxy design = adult room. (-) Pricey.
BYD Tang (EV)	7-Seater	~325,000	N/A	~210	(+) Luxury cabin; EV savings. (-) Range (~400km).
Hyundai Palisade	8-Seater	~330,000	~185k	~1,100	(+) Flagship luxury feel. (-) High maintenance.
Chevrolet Traverse	8-Seater	~355,000	~175k	~1,150	(+) Largest interior/trunk. (-) Hard to park.
Ford Explorer	7-Seater	~369,900	~180k	~1,100	(+) Performance/Prestige. (-) High fuel tax.

(Please comment below if any details are incorrect, outdated or missing.)

Bonus: Company car

Does it make sense to take a company car?

Typically when a company gives you a car they take out an operating lease and cover the costs for you. They will also often give you unlimited free petrol.

In exchange, they will lower your salary.

There are three potential costs that we need to take into account when determining whether the deal is worthwhile:

1. Lost salary
2. Lost pension and Keren Hishtalmut deposits as a result of the lower salary
3. Extra tax to be paid

We will use our Employee Net Income Calculator to compare total take-home pay with and without the car. Here’s an example:

Before

• Salary for pension: 24,000
• Non-Pensionable payments: 350
• Benefits in-kind: 0

After

• Salary for pension: 20,000
• Non-Pensionable payments: 350
• Benefits in-kind: 3,600

What is “benefits in-kind”?

The government taxes you based on the value of the car provided by your company (שווי שימוש). The taxable amount per month is 2.48% of the original car value, minus a discount for hybrid and electric cars. You can use this government calculator to find the exact number to type into “benefits in-kind”.

Here are the results:

Before

After

We can clearly see that after accepting a company car you will take home 3,587 ₪ less and receive 833 ₪ less pension for a total cost of 4,420 ₪ per month.

Compare this to the all-in cost of buying and maintaining a car yourself. In almost all cases you will find that it is much cheaper to politely decline the offer of a car from work.