A Guide to Interest Rates on Car Loans in Pakistan

Interest Rates on Car Loans in Pakistan

Purchasing a car in today’s economic landscape is tough as most people don’t have the funds to pay the total amount upfront. This is why many people avail the facility of car loans, so they can buy it in monthly instalments. Graana.com shares a detailed guide on interest rates on car loans in Pakistan below, to help you better understand the process and give you an overview of the payments you would be required to make on a monthly basis each year.

 

Banks’ Interest Rates on Car Loans in Pakistan

If you’re buying a new or used car, you should take a look at the interest rates on car loans offered by different banks in Pakistan to consider your options. First, however, you need to be familiar with KIBOR (Karachi Interbank Offered Rate). This is the daily reference rate that is offered by a bank that is lending to another bank in the Karachi interbank money market. It is applied to the type of financing facility that you’re using. 

Following are the different types of car loans in Pakistan that are offered by various major banks.

 

Habib Bank Limited (HBL)

HBL Interest Rates on Car Loans

 

HBL is one of the largest commercial banks in the country, with a presence in different parts of the world as well. This leading bank offers various facilities such as home loans, car loans and personal loans to clients. Many customers opt for its car loan facility as it is a flexible and hassle-free way to purchase a new or used car. Some of its features are listed below.

  • The financing facility offers up to 70% of the total value of the car. 
  • The financing limit is between Rs. 200,000 and 3,000,000. 
  • You have to repay the loan within a 5-year time period. 
  • You can make various partial payments as well.
  • There is an option of choosing the car from a network of over 150 eligible dealers in the country. 

 

Eligibility Criteria

There are different eligibility criteria for salaried individuals, pensioners and business professionals.

 

Salaried Individuals

  • The applicant must be a Pakistani citizen.
  • His/her minimum monthly income should be Rs. 20,000.
  • The applicant must be 22 (or more) years of age at the time of loan application and a maximum of 60 years of age. 

 

Pensioners

  • The applicant should be a maximum age of 70 at the time of loan maturity.
  • The applicant should have a pensioner account with HBL.
  • His/her monthly income should at least be Rs. 20,000.
  • The applicant must be a Pakistani citizen.

 

Self-Employed/Business Professional

  • The applicant must be a Pakistani citizen with a minimum income of Rs. 25,000 per month.
  • The applicant should be at least 22 years of age at the time of the loan application and a maximum of 60 years at the time of maturity. 

In order to apply for this auto loan, just visit the nearest HBL branch with the necessary documents. Following are the documents that are required by both salaried and business professionals.

 

Salaried Individuals

  • Original copy of CNIC along with verified copy
  • Two recent passport size photographs
  • Latest original salary slips and personal bank statement for the last three months

Self-employed

  • Original copy of CNIC along with verified copy
  • Two recent passport size photographs
  • Bank statement for the last 6 months along with bank letter confirming details of account
  • Proof of occupation/business

 

HBL only offers the fixed car loan facility to its customers, which means the interest rate remains the same throughout the tenure of the loan facility. Currently, the interest rate on car loans in Pakistan is around 15%. HBL has a car loan calculator on their website as well, through which you can calculate the monthly instalments you have to pay to the bank. 

 

Bank Alfalah

Bank Alfalah Car Loan

 

Bank Alfalah is one of the leading banks in Pakistan, with operations set up all across the country. They offer several lending facilities, which include car loans and home loan facilities. By availing this, you can purchase a locally assembled/manufactured new or used car. It has a flexible loan facility with a minimum tenure of 2 years and maximum tenure of 5 years. In order to apply for the loan, you have to meet certain requirements set by the bank.

 

Eligibility Criteria

The following are the requirements set by Bank Alfalah for salaried and self-employed individuals. 

 

Salaried Individuals

  • The applicant must have a minimum of Rs. 30,000 income per month.
  • The age of the applicant must be between 21 and 65 years of age at the time of loan maturity for private sector employees. For government employees, 60 years is the maximum age limit. 
  • If you’re a permanent employee, you must have at least 6 months of total professional experience, whereas contractual employees should have a minimum of 1 year’s experience. 

 

Self-Employed Professionals/Business Individuals

  • The applicant must have a minimum of Rs. 50,000 income per month. 
  • The age of the applicant must be minimum of 21 years and a maximum of 70 years at the time of loan maturity.
  • An individual must have a minimum experience of 1 year in current business.

 

To apply for this loan facility, you have to visit the nearest Bank Alfalah branch with the required documents, which include:

  • Filled and signed application form
  • Copy of CNIC
  • SBP undertaking on loans availed and monthly liabilities
  • 2 recent photographs

 

Bank Alfalah Markup Rates

Following are the markup rates on different types of vehicles. 

 

Financing Product on Variable Rates (only for locally assembled/manufactured vehicles) 2 Years 3 Years 4 – 5 Years 6 – 7 Years (only for vehicles up to 1000 CC)
Brand New Vehicles 1 Year KIBOR + 3.50% 1 Year KIBOR + 4.00% 1 Year KIBOR + 4.50% 1 Year KIBOR + 5.00%
Used Vehicles 1 Year KIBOR + 5.00% 1 Year KIBOR + 5.00% 1 Year KIBOR + 5.00% 1 Year KIBOR + 5.00%
Brand New Semi Commercial Vehicles 1 Year KIBOR + 5.00% 1 Year KIBOR + 5.00% 1 Year KIBOR + 5.00% (NA)

 

If you’re applying through the fixed rate facility, then the following table lists the complete markup rate that you have to pay throughout the loan tenure.

 

Financing Product on Fixed Rates 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years
Auto Loan for Brand New Vehicles 16.00% 16.00% 16.00% 16.50% 16.50% 16.50% 16.50%
Auto Loan for Brand New Imported Vehicles 16.50% 16.50% 16.50% 16.50% 16.50% (NA) (NA)
Brand New Semi Corn. Vehicles (Local Make) 17.00% 17.00% 17.00% 17.00% 17.00% (NA) (NA)
Second Hand Vehicles 17.50% 17.50% 17.50% 17.50% 17.50% (NA) (NA)

 

Allied Bank Limited

Car loan of Allied Bank

 

Allied Bank is another commercial bank that offers car loans to customers on low markup rates with easy repayment options. This financing facility is available for all Pakistani cardholders with a repayment period of up to 7 years. Through this auto loan facility, you can get financing of up to Rs. 6 million. In order to avail it, you are required to visit any branch near you and submit the following documents.

  • The applicant must submit the last six months’ bank statement. 
  • A copy of the CNIC/NICOP/Smart NIC of the applicant should also be included.
  • There should be 2 recent passport-size photographs of the applicant.
  • In the case of a salaried individual, the applicant must submit the salary slip of the last two months.
  • The applicant must submit the complete and duly signed application form to the respective branch.

 

Eligibility Criteria

  • The applicant must be a Pakistani national.
  • The applicant should be 21 to 59 years of age.
  • The salaried individual applying for the loan facility should be a permanent employee in the company or organisation.
  • Any individual applying for a car loan must have a salary account with ABL for at least six months. 
  • The gross salary of the individual should be Rs. 40,000 or more.
  • The applicant must have a minimum experience of 3 years with the current employer. 

Allied Bank Limited is offering this facility at low markup rates of up to 1 year KIBOR + 4%. It should be noted that the interest rate on car loans tends to vary with any changes in the policy rate from the State Bank of Pakistan.

For more related information, keep following the Graana blog.

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