Auto Financing in Pakistan witnessed a strong rebound in July 2025, recording a 25.3% year-on-year (YoY) surge as lending hit Rs. 286 billion compared to Rs. 228 billion in the same period last year, according to fresh data from the State Bank of Pakistan (SBP) compiled by Arif Habib Limited (AHL).
On a month-on-month (MoM) basis, car loans also gained momentum, increasing by 3.3% from Rs. 277 billion in June 2025. This marks the continuation of the upward trajectory that started in mid-2024 after a slowdown caused by economic uncertainty.
Interestingly, the boost in auto financing came even as total private sector borrowing fell 1.9% MoM to Rs. 9.48 trillion in July. Business loans dipped 2.6%, but consumer financing grew 1.7% to Rs. 929 billion. Personal loans rose 2% to Rs. 263 billion, while credit card borrowing jumped 2.6% to Rs. 163 billion. Home building loans also edged higher by 0.7% to Rs. 208 billion.
Analysts say this sharp pickup in car financing reflects improved market confidence, supported by easing inflation, better macroeconomic conditions, and reduced borrowing costs. After facing pressure in 2022–2023 due to high interest rates, restrictions on imports, and weak demand, the auto loan segment is now showing strong signs of recovery.
Read More: Punjab to Launch Electric Buses Across all Districts
Overall, SBP numbers show that loans to the private sector climbed 14.4% YoY in July 2025, with business financing still dominating at Rs. 8.2 trillion. However, the standout performer remains Auto Financing in Pakistan, signaling renewed interest in vehicle purchases and a positive shift in consumer sentiment.
