There is, Too, Such Thing as a Free Loan

Ray Charles sings I’m busted, and here’s how he puts it:

My bills are all due and the baby needs shoes and I’m busted
A big stack of bills that gets bigger each day
The county’s gonna haul my belongings away cause I’m busted

Who hasn’t been in that situation – hopefully not as dire as in the song? So what do you do? Do you beg your parents for a handout? Do you take a bank loan and sell off your kidneys as collateral?

I spoke to a surprisingly objective bank rep, Elli Davids. He did admit that it’s not so cheap to get a loan: at today’s rates of prime plus a percentage, the interest can go as high as 7%.

Of course, this rate, like anything else in Israel,  is open to negotiation. We tend to be lazy about going around and comparing prices.  But Bankrate (easy Hebrew) does a lot of the legwork for you. And then you can put the screws on the bank to get the best deal. They want your loan, believe me. It’s a good investment for them!

Protectzia – vitamin P, the engine that moves our little country — doesn’t hurt, either. Small business owner Marci Rapp said she was almost refused a loan until the bank manager recognized one of the guarantors, and said: why didn’t you tell me Mr. Savetheday was signing? And like the Wizard of Oz, he said: that’s a horse of a different color. She got the loan.

But if you want to get a free loan, you can. Oh yes. Through a gemach, an almost underground network of all kinds of loans: money, furniture, cellphones, equipment, wedding gowns, pacifiers, you name it. Look at this list of what you can get, and you usually don’t have to pay for anything, except for the popular wedding-dress gemachim, which require you to pay for the dry cleaning.

Not just for the ultra-Orthodox
These gemachim have usually been considered confined to the ultra-Orthodox community, but that’s where we’re wrong: they are open to all. That’s also true when it comes to borrowing money:  you can, indeed, borrow money, assuming you have guarantors. And it’s not for hundreds of shekels: it’s for thousands.  And, you don’t even have to give a reason.

In fact, so popular are they that the Israeli government passed a law legalizing these free loan options – some of which operate as banks, including deposits.  The Finance Ministry and Bank of Israel Governor Stanley Fischer objected to the ruling, claiming that they have “no problem” with the loans themselves, they’re just “worried” that depositors may lose money if the funds run into trouble, since these funds are not insured. They are also concerned about money laundering.

Finance Ministry, Stanley Fischer: wake up and smell the coffee. What about the so-called legitimate banks? You don’t worry that they charge us usurious rates? Or that people are sometimes forced to go to the “gray market,” at the literal risk of their lives?

So, if you could have a bank loan or a free-interest loan, which would you take? A no-brainer.  The powers-that-be don’t like it.

And I say: a raspberry to officialdom.

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