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Buying a car or leasing in Israel, what's the best choice?
You've probably heard of leasing in Israel.
You need a car and have a certain budget.
You're probably going to decide whether to buy a new or used car.
Well, these are not the only solutions! You can also opt for leasing in Israel.
In this article, we'll look at the different aspects of leasing in Israel, from an accounting and tax point of view.
Let's take a look at the 2 types of leasing available in Israel:
- Or private leasing (the conditions of which are detailed below).
- Or operational leasing This involves financing the vehicle while the leasing company provides ongoing maintenance.
This type of service is often used in companies, where employees receive a company vehicle, according to the "operational" model, and the leasing company is responsible for all treatment and repairs.
Private leasing
What is private leasing? For whom is it more profitable?
When should a company in Israel choose this type of vehicle solution?
Private leasing (ליסינג מימוני), is in fact a long-term rental, usually up to 5 years.
You must make an initial deposit of approximately 15% to 30% of the price of the vehicle, and ensure monthly payments. (Which are then transferred to the leasing company).
This car will be registered in the name of the leasing company in Israel, until the end of the period during which you can finalize the purchase.
In this case, payments already made are deducted from the current value. The amount deducted is agreed at the outset.
Note that you can choose different payment methods.
Either you want to increase the rental portion, or "play" with the down payment at the expense of the monthly installments. And vice versa. (the higher the deposit, the lower the monthly payments).
In some cases, given the interest rates offered by existing financing solutions, it is better to borrow a large part of the money and invest the rest elsewhere (pension fund in Israel, Keren Ishtalmoutshort/medium-term financial investment solutions, corporate cash investments, etc.).
An example to better understand the leasing solution in Israel.
Should I exercise the purchase option on my lease or not?
In leasing contracts, check what is included in the amount you have to pay each month.
A possible pitfall is to indicate a monthly amount that does not include VAT.
Moreover, VAT in this case is not deductible for a company in Israel. This will be the subject of a separate article.
Watch out for the small letters!
In leasing contracts, check what is included in the amount you have to pay each month.
A possible pitfall is to indicate a monthly amount that does not include VAT.
Moreover, VAT in this case is not deductible for a company in Israel. This will be the subject of a separate article.
The "Dray & Dray" accounting firm is based in Jerusalem & Tel Aviv.
We provide day-to-day support for your accounting and tax affairs in Israel.
We also have an English-speaking department specializing in business start-ups and accounting issues in England.
Finally, the firm's real estate department handles tax optimization and real estate issues for owners and investors in Israel.
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