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The Ultimate Guide to Buying a New or Used Car in Jerusalem

Updated: Dec 13, 2023

Purchasing a car can be an exciting and challenging experience, especially when you're navigating the process in a foreign country. This ultimate guide will help you understand the ins and outs of buying a new or used car in Israel, while highlighting the essential differences between the Israeli and American car-buying processes.

Israeli Taxes and Fees

When buying a car in Israel, you'll encounter several taxes and fees that can substantially increase the final price. Here are the main ones you should be aware of:

  1. Purchase Tax: This tax is applicable to both new and used cars, with the rate varying depending on the vehicle's emissions, size, and age. For new cars, the tax can range from 30% to 83% of the car's value.

  2. Value Added Tax (VAT): The standard VAT in Israel is 17% and is applied to the car's final price, including the purchase tax.

  3. Annual Licensing Fee: This fee varies depending on the vehicle's weight, size, and engine capacity. You'll need to pay this every year to keep your car registered.

  4. Mandatory Insurance: Israeli law requires that all car owners have compulsory third-party liability insurance. Additional coverage options are also available.

Benefits for New Olim

New immigrants (olim) to Israel can benefit from a one-time tax reduction when purchasing a new or used car. This reduction can be up to 30% of the purchase tax and must be claimed within three years of making aliyah. Keep in mind that you'll need to present your Teudat Oleh or Teudat Zakaut to qualify for this benefit.

Differences Between Buying a Car in Israel vs. the USA

There are a few key differences between purchasing a car in Israel and the United States:

  1. Higher Prices: Cars in Israel tend to be more expensive due to taxes, fees, and import costs. Be prepared to spend more than you would in the USA.

  2. Smaller Selection: The Israeli car market offers a smaller selection of makes and models compared to the American market. You might need to be more flexible in your choices.

  3. Vehicle Inspections: In Israel, used cars must undergo a test (called a "test hamadregah") before they can be sold. This inspection helps ensure the vehicle's safety and compliance with Israeli regulations.

  4. Negotiation: When buying used, haggling is more common and culturally accepted in Israel than in the USA. Don't be afraid to negotiate on the price when buying a car. When buying new, as most of the "dealers" are owned by the same group, there isn't much room to haggle on price, though possibly on upgrades on the car or an extended warranty.

Final Tips for Buying a Car in Israel

  1. Research: Familiarize yourself with the Israeli car market, including popular makes and models, average prices, and dealership reputations.

  2. Test Drive: Always take a test drive of used cars to ensure the car meets your needs and preferences. New car dealers may not allow a test drive.

  3. Be Patient: Buying a car in Jerusalem can be a time-consuming process. Be prepared for paperwork, inspections, and waiting periods.

  4. Seek Professional Help: Consider working with a car-buying consultant or an experienced Israeli friend to help you navigate the process.

By keeping these factors in mind, you can make an informed decision and find the perfect car for your needs in Israel. Happy car hunting!

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