The choice of variable rate credit in Israel is quite extensive. It is possible to borrow at a variable rate according to your currency regulator of choice. There are variable-rate loan options that can be linked to the LIBOR, the EURIBOR, or the Prime (or “Tel-Bor”) rate.
The LIBOR is the “London Interbank Offered Rate.” This rate is that which is practiced by London banks, then published and used as a benchmark for bank rates around the world. This Interbank rate varies in principle every 3 or 6 months. The EURIBOR is a similar benchmark, set according to the Euro.
The Prime Rate, or the “Tel-Bor” rate, is a variable rate defined by the average rates of the Bank of Israel every month.
Choosing a variable rate credit will allow you to repay this credit without penalty for early repayment, typically with a minimum of 10 days’ advance notice. However, to determine case-specific terms and to avoid potential risks, we recommend that you discuss early repayment options with one of our advisers.
Fixed-rate credit has recently been introduced in Israel. Credit with monthly payments known in advance allows you a certain serenity by mitigating surprise. However, in the event of early repayment, the bank may charge penalties that will be calculated based on the bank’s potential shortfall. The time period for this determination by the bank is typically the rate of interest from the day the credit was obtained to the lending rate on the day of the repayment of the loan.
It is possible to have fixed-rates with repayments in foreign currency or shekels. The fixed-rate option allows you to know in advance the amount of your refunds.