What Type of Car Financing Banks Offer and interest rate 2021- Pakistan
Buying a car is marked as an achievement in one's life. People look for the used or new cars keeping in mind the budget, trend and certain features.
The high car prices both new & used in Pakistan has been a real challenge for customers. That why the ratio of car loans or car financing has increased in recent years. Here we'll tell you about what type of auto or car financing banks offer in Pakistan. What is the interest rate on a car loan In Pakistan in 2021?
Also, you'll have an idea about monthly installments on different cars.
The interest rate on car loans in Pakistani banks depends on KIBOR(interbank rate)+ Bank interest rates.
In January 2021, the KIBOR rate is 7.1% and the bank interest rate ranges between 3%- 6%.
The total interest rate on car loans or car financing ranges between 12% - 16% in Pakistan.
The interest rate varies as per changes in the KIBOR rate. Mostly it remains fixed for one year.
Other than KIBOR, the interest rate and monthly installment on car financing depend on:
- The type of car
- Selected Tenure
- Age of applicant
- Amount of downpayment
Several Banks in Pakistan are offering New and Used Cars on Finance. HBL Car Financing, Dubai Islamic Bank Car Financing, UBL, and Faysal Bank Car financing are among Popular Car Finance Options in Pakistan. They offer Cars on a monthly Installments plan.
There are two types of car financing. One where banks purchase a car (used or new) for the customer instead of giving cash finance. You have to submit an upfront amount and the rest amount will be financed from the bank. Meezan Bank, Dubai Islamic Bank, and Bank alfalah offer the above car/auto financing.
Another type of car financing is the cash amount that bank finance to purchase a customer's required car. HBL, JS bank, Askari Bank offers this car financing. Dubai Islamic bank also offers cash financing.
After the recent growth of the used cars sector, especially the imported cars, banks started to finance used cars and imported cars.
PROCESS OF CAR FINANCING
The Car Finance process is almost similar in all banks. The procedure, documentation, and eligibility criteria are almost comparable for both new and used car financing with little variation in each bank.
Here are banks that offer car financing:
- Dubai Islamic Bank
- Bank Alfalah
- MCB
- HBL
- UBL
- BOP
- Askari Bank
- Soneri Bank
- Faysal Bank
- Bank Al Habib
- JS Bank
Eligibility criteria for Auto Finance
- Citizen of Pakistan
- Age limit 22 to 60 years
- A continual source of income
- Tenure is mostly 1 year to 7 year in all banks
Documents required
- Passport size photograph,
- Copies of National Identity Card,
- Bank statements of last three months
- Additional documentation required by the bank
After submitting documentation, the financing case is forwarded for further processing. There are Pre-approval ch ks to ensure financial stability.
Once the bank has approved this facility, the car is arranged and delivered to the customer, or cash is transferred to the customer's account. A customer can calculate monthly Car Installment through Car Finance Calculators.
As mentioned earlier the variable interest rates, varying between KIBOR+3% to KIBOR+5% depending on the same variables.
Do we need to mortgage something to get Car loan?
The loan is secured against the car itself. It means that customers do not have to mortgage any property or other assets to get a car loan.
Pros and cons of buying a car through car financing
- Rather than waiting to arrange a huge sum of cash altogether, you get a car loan to buy your dream car in time.
- You can manage to maintain your savings for other current and future expenses.
- The loan is secured against the car itself. It means that customers do not have to mortgage any property or other assets to get a car loan.
- After few years down customer have the opportunity to own the car has paid off their car loan completely.
- Here customer also has the chance to amplify the credit history by procuring a car loan and strictly adhering to the repayment cycle.
Cons:
- The monthly installment is not fixed.
- Monthly installments can vary depending on the labor rate.
- You may have to face a bank fine or confiscation of the car for not paying installments in time.
Popular car type financed in Pakistan
Honda
Suzuki
Toyota
Other financed cars
BMW
Kiya
Audio
Faw
Proton etc
Enter your dream car, tenure, downpayment and know your monthly installment plan from the MEEZAN BANK car finance Calculator:
