On April 17, 2024, a customer of the Mizrahi Tefahot group emailed a bank employee: "I am not in the country and I have no intention of returning in the near future. I want to pay off the loan and sell the car myself." He asked one question: "What is the final amount to pay off the loan?"
In the same email he wrote: "At my branch, Ramat HaSharon, they could not find where the loan is." Three days earlier he had sent a similar message to the support address of Mizrahi Tefahot Leasing, asking how to find out the "loan balance".
No payoff amount was sent to him. What he did get, on May 9, 2024, was one line from the company's law firm: "The amount of the debt as of today is NIS 153,263.10 (not final)".
What the customer did not know: two weeks before his first email, on April 1, 2024, the Mizrahi Tefahot Leasing ledger recorded a "transfer to legal handling" of NIS 153,026.86. On June 24, 2024 a pledge enforcement file was opened against him over the car, and in early July a receiver was appointed over the car, ex parte. In December 2024 a second file was opened, to enforce a promissory note of NIS 184,000. In February 2026 Bank Mizrahi Tefahot itself opened a third proceeding, over the customer's current account.
In the summer of 2026 the Tel Aviv District Court approved a settlement in a class action against Mizrahi Tefahot, Hapoalim and Leumi over the way they calculated mortgage early repayment fees. Mizrahi Tefahot will pay NIS 5.5 million, more than any other bank. The borrowers in that case repaid their loans and disputed the price. In this file the question comes earlier: could the loan be repaid at all?
In brief
- In April 2024 the customer wrote to the bank "I want to pay off the loan and sell the car myself", and asked for a payoff amount. He was never given a final payoff amount.
- His loan agreement allows early repayment on 10 business days' written notice, and forbids the company to call the loan without written warning.
- The warning letter produced, dated February 28, 2024, was sent to an address with no street name, when the customer was already abroad.
- In 2017 the same bank processed the early repayment of a previous car loan of the same customer, and released the lien, in less than a month.
- Two execution files are open over the same loan, and their balances differ by NIS 80,226.76.
- In the settlement over mortgage early repayment fees, Mizrahi Tefahot, Hapoalim and Leumi will pay about NIS 9.2 million without admitting a breach. The settlement does not cover car loans.
The class action: the banks paid over the price of repayment
According to reports in Globes and Bizportal, the claim was that the banks offset "negative discounting differences" only against the early repayment fee of the same mortgage track, and not against fees on other tracks of the same mortgage. The plaintiffs argued that borrowers were thus charged more than the Banking Order (Early Repayment of a Housing Loan), 2002, allows. The claim was valued at NIS 107 million.
Under the settlement the banks agreed to pay about NIS 9.2 million into the class action fund, not to customers directly. According to the reports, Mizrahi Tefahot will pay NIS 5.5 million, Hapoalim about NIS 2.6 million and Leumi about NIS 1 million. The banks did not admit a breach. It was agreed that the offset was lawful, and the banks undertook to clarify in their loan agreements and explanation sheets how it works.
The mortgage borrowers in that case got what they asked for: they repaid the loan. The dispute was over how much it cost them.
What the car loan agreement says
The loan was signed on December 20, 2021 with Igud Leasing Ltd., on a balloon track, to finance a car. The company later changed its name to Mizrahi Tefahot Leasing Ltd., a subsidiary of Bank Mizrahi Tefahot. The monthly payments were collected from the customer's current account at Bank Mizrahi Tefahot.
Section 3.1 of the agreement, headed "Early repayment", states: "The borrower may make an early repayment on his own initiative, provided that he notifies the company in writing at least 10 business days before the date on which he wishes to make the early repayment".
The same section sets a duty for the company: "The company will not call the loan, or any part of it, for early repayment on its own initiative without the borrower having been given a written warning in accordance with the law (insofar as a duty to give warning applies in the circumstances under the law)".
On fees, the section says the company may charge an early repayment fee "up to the maximum rate under the law, including the directives of the Bank of Israel (insofar as they apply to the company)". In other words, the agreement itself gives the customer a right to repay, and promises him written warning before the company calls the loan.
2017: same bank, same customer, repaid in under a month
The contact log of Bank Mizrahi Tefahot, given to the customer in February 2026 in response to an access request under the Privacy Protection Law, records a previous car loan of his. On February 8, 2017 the log reads: "The car loan is to be repaid on 1.3.17 against the deposit being released, and the lien on the car cancelled". The same entry records a "request for early repayment". On March 5, 2017 the log reads: "The loan has been repaid".
Twenty-five days passed from request to payoff. When the system works, early repayment of a car loan is routine: check the balance, set a date, release the lien.
2024: the loan the branch could not find
Between the earlier loan and the new one the structure changed. Igud Leasing changed its name, and Union Bank (Bank Igud) was merged into Bank Mizrahi Tefahot. In his opposition to the enforcement of the note, the customer argued that he was never notified of the change, although under section 24 of the agreement the company had to inform him in writing of any change in its contact details. The company's address in the agreement was in Lod. The request to enforce the note gave an address in Bnei Brak.
In October 2023, when the war broke out, the customer asked to defer his payments under the Bank of Israel relief plan. According to his affidavit, he was told at the bank that no loan was registered in his name. We covered this chapter in the article He asked to defer a payment in wartime, and found himself barred from leaving the country. On November 7, 2023 he left Israel.
Until December 2023 the payments were collected from his account as usual. From January 2024 the ledger shows returned debits. On February 28, 2024 Mizrahi Tefahot Leasing produced a "warning before taking proceedings": arrears of NIS 5,349.59, and if not paid within 21 days, "we will be entitled to call the loan in the account for immediate repayment". The address block of the letter has no street name, only a house number and a locality. That address does not exist. The customer was abroad at the time.
On April 1, 2024 the ledger shows a balance of NIS 153,026.86 transferred "to legal handling". Thirteen days later the customer sent his first email, and three days after that the email in which he wrote that he wanted to pay off the loan.
What happened to the request to pay off
The emails were not answered with a payoff amount. On May 2, 2024 the customer exchanged WhatsApp messages with the law firm Chen Fisher Gabbay, which represents the company, and wrote that he wanted "to close the debt and sell the car". On May 9 he received the "not final" amount. He was not given approval to sell the car and pay off the loan from the proceeds.
On June 10, 2024 bank employee Yaniv Perlov signed an affidavit stating that "the debtor preferred not to respond to the representatives' approaches", and that there was a concern the customer would make the car disappear. On the basis of the affidavit a receiver was appointed over the car ex parte. We covered the proceedings that followed in the article Mizrahi Tefahot debt collection proceedings.
The customer who wrote "I want to pay off the loan" was presented in the proceeding as someone evading.
What the court and the registrars decided
On May 31, 2026 the Netanya Magistrate's Court dismissed the customer's opposition to the enforcement of the note. The judgment states that "the respondent clarified that notices were delivered to the applicant before the loan was called for immediate repayment", and that the customer's arguments are "technical in essence". It also states: "At most, there may be room to examine the applicant's arguments regarding the current amount of the debt", and that this argument can be raised in the execution file. No appeal was filed against the judgment.
In the pledge file the customer stated, in an affidavit of December 23, 2025, his right to early repayment under section 3.1, his requests to exercise it, and that he received no warning before the loan was called. According to a motion he filed in July 2026, the creditor filed no counter-affidavit on this point, and no ruling has been given on the argument.
This article does not deal with whether the customer owes money. The customer himself asked to pay. The question is why payment was not possible, and what the proceeding that replaced it cost.
What a repayment that never happened costs
These are the amounts shown in the documents for the same loan:
- February 28, 2024, warning letter: total balance of NIS 151,667.59.
- April 1, 2024, company ledger: NIS 153,026.86 transferred "to legal handling".
- May 9, 2024, the law firm: NIS 153,263.10, "not final".
- December 2024, note file: the note is for NIS 184,000, and the file was opened for NIS 159,609.83.
- May 31, 2026, debt report in the note file: NIS 222,040.92.
- July 27, 2026, debt breakdown report in the pledge file: NIS 141,814.16.
Both files concern the same loan. The difference between their balances is NIS 80,226.76. According to a motion filed by the customer, he has no document explaining how the proceeds of the sale of the car will be credited in each file. According to him, in October 2026 the car was sold by tender in the pledge file, without his receiving an invitation to the tender.
The third proceeding: the bank that would not take money
In February 2026 Bank Mizrahi Tefahot opened a liquidated-sum claim against the customer at the Ramla execution office, file 513221-02-26, over a debit balance of NIS 57,714 in the current account from which the loan payments were collected. In August 2026 the customer filed an opposition. It has not yet been decided.
With the opposition the customer attached a notice from the Israel Tax Authority dated September 6, 2025: a credit balance of NIS 17,823 in his favor was not deposited, because his account details "were deleted from our records because the bank did not confirm the correctness of the account holder's details". According to the opposition, the bank's general terms give it a right to offset credit balances against a debt, and the money was not credited to reduce the debt.
The opposition also argues that the customer asked again and again for the account transactions, from the emails of April 2024 to a recorded call on August 4, 2026, and that they were not provided.
The class action and this file, side by side
| The class action | This file | |
|---|---|---|
| Type of loan | Mortgage | Car loan secured by a pledge |
| Lender | Mizrahi Tefahot, Hapoalim and Leumi | Igud Leasing, today Mizrahi Tefahot Leasing |
| Rule | Banking Order (Early Repayment of a Housing Loan) | Section 3.1 of the agreement, and Bank of Israel directives "insofar as they apply to the company" |
| Was the loan repaid | Yes | No. The customer asked for a payoff amount and got a "not final" figure |
| What was argued | A fee higher than allowed | Calling the loan without proper warning, and a payoff request left unanswered |
| Outcome | Settlement of about NIS 9.2 million, no admission | Two execution files and a third proceeding by the bank |
What this article does not claim
This article does not claim that the class action settlement is connected to this file, and does not claim that anyone acted deliberately. It presents the agreement, the requests, the decisions and the amounts. These documents show that the customer asked in writing for a payoff amount when the company had already transferred the loan to legal handling, and that instead of a payoff amount proceedings were opened against him.
Questions for Bank Mizrahi Tefahot and Mizrahi Tefahot Leasing
- Why were the emails of April 14 and 17, 2024 not answered with a payoff amount?
- Where was the loan managed after the merger, and why could the customer's branch not locate it?
- To what address was the warning of February 28, 2024 sent, and was any further warning sent before the transfer to legal handling?
- How is the NIS 80,226.76 gap between the balances in the two files over the same loan explained?
This article is based on the loan agreement of December 20, 2021, the warning letter of February 28, 2024, the company ledgers and the bank's contact log provided in response to an access request, the emails of April 14 and 17, 2024, the judgment in the note file of May 31, 2026, the opposition to the enforcement of the note, the motions in the pledge file and the opposition to the liquidated-sum claim. The class action data are based on reports by Globes and Bizportal. Identifying details have been omitted. The site will publish the response of Bank Mizrahi Tefahot and Mizrahi Tefahot Leasing, if received.
Frequently asked questions about early loan repayment in Israel
Does the class action settlement over early repayment fees apply to car loans?
No. The claim concerned mortgages, and the Banking Order (Early Repayment of a Housing Loan), 2002, applies only to a loan to buy a home or secured by a mortgage on a home. The settlement money goes to the class action fund, not to customers.
Can a Mizrahi Tefahot Leasing car loan be repaid early?
Under the agreement in the file described in this article, yes. Section 3.1 allows early repayment on written notice at least 10 business days before the repayment date. Send the request in writing, ask for a dated payoff letter, and keep a copy and proof of sending.
What fees apply to early repayment of a loan that is not a mortgage?
For banks, the matter is governed by Proper Conduct of Banking Business Directive 454 of the Bank of Israel. According to the explanation sheets the banks publish, the possible fees are an operational fee, a fee for notice of less than 10 days, a discounting difference fee, and for CPI-linked loans an index loss fee. The agreement in this article says the Bank of Israel directives apply "insofar as they apply to the company".
What can you do when the bank does not answer a payoff request?
Send a written request to the lender’s address in the agreement and to its current address, and ask for a final payoff amount and date. Keep every request, reply and call with its date. If the lender is a banking corporation, you can turn to the Public Enquiries Unit of the Banking Supervision Department at the Bank of Israel. In the file described here, the April 2024 emails are what show that the customer asked to pay off.