Islamabad, Mar 18, 2025: Auto financing in Pakistan has surged to Rs. 249 billion by the end of February, rising from Rs. 241.6 billion in January.
This increase highlights a growing reliance on bank leasing for both new and used vehicles.
The key driver behind this trend is a sharp decline in interest rates, which have dropped from 22% to 12% over the past eight months.
While the current financing level shows steady recovery, it remains lower than the all-time high of Rs. 368 billion recorded in June 2022.
Strong Vehicle Sales Reflect Market Confidence
The demand for cars, SUVs, vans, and pickups has been robust, and experts predict continued growth in the coming months.
Several factors support this positive outlook, including stabilized prices, steady exchange rates, rising consumer confidence, and the launch of new vehicle models.
From July 2024 to February 2025, total vehicle sales reached 89,770 units, reflecting a 50% increase compared to 59,700 units sold in the same period last year.
This surge aligns with the 23.4% increase in imports of semi and completely knocked down (CKD/SKD) kits, which rose to $575 million from $466 million during the same period of the previous fiscal year.
Challenges in Auto Financing Accessibility
Despite the favorable market conditions, many potential buyers still face financing challenges.
The loan limit is capped at Rs. 3 million, with a maximum repayment period of five years for vehicles up to 1,000cc and just three years for smaller vehicles.
Additionally, the 30% down payment requirement makes it harder for middle-income consumers to secure financing.
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Pakistan’s auto financing sector is witnessing steady growth, fueled by declining interest rates and increasing vehicle demand.
While the market outlook remains positive, accessibility constraints such as loan caps and high down payments continue to impact affordability.
If financial institutions introduce flexible financing solutions, the auto sector could experience even stronger expansion in the coming months.
