# Car financing in Pakistan: bank car loans compared

URL: https://which.pk/money/guides/car-financing-pakistan/
Author: Ahtisham Imtiaz
Updated: 13 Oct 2026

## Summary

To buy a car on bank instalments in Pakistan you pay at least 30% down, borrow at most Rs 30 lakh across all banks, and repay within 5 years for cars up to 1000cc or 3 years above that. Floating rates are 1-year KIBOR plus 2.5% to 4.5%, about 15.3% to 17.3% with KIBOR at 12.75% on 12 October 2026. Meezan's fixed Ijarah rentals ran 13.90% to 14.36%. Repayments on all consumer financing must stay within 40% of your net disposable income.

## Key facts

- Minimum down payment: 30% of the car's value
- Maximum car loan: Rs 30 lakh, all banks
- Longest tenure: 5 yrs up to 1000cc, 3 yrs above
- 1-year KIBOR (12 Oct 2026): 12.75%

To buy a car on installment in Pakistan from a bank, you pay **at least 30% down**, borrow **no more than Rs 30 lakh** across all banks, and repay within **5 years for cars up to 1000cc or 3 years above that**. These are SBP limits. Floating rates in October 2026 were 1-year KIBOR plus 2.5% to 4.5%, about **15.3% to 17.3%** a year. Meezan's fixed Ijarah rates ran 13.90% to 14.36%.

KIBOR is the Karachi Interbank Offered Rate, the benchmark banks add their margin to. SBP's sheet showed 1-year KIBOR at **12.75% on 12 October 2026**, up from 12.54% on 1 October. On a floating-rate loan your instalment changes when the bank reprices; Bank Alfalah, for example, reprices on each loan anniversary.

## What are SBP's rules for car loans?

The State Bank of Pakistan (SBP) sets the limits in its Prudential Regulations for Consumer Financing. The current car loan rules come from two circulars, of September 2021 and May 2022:

| Rule | Limit |
|---|---|
| Down payment | At least 30% of the car's value |
| Loan size | Rs 30 lakh in total, from all banks and DFIs, at any time |
| Tenure, cars up to 1000cc | 5 years |
| Tenure, cars above 1000cc | 3 years |
| Imported cars | Not eligible, new or used |
| Repayments | All consumer loan instalments within 40% of net disposable income |

These apply to all locally assembled cars, including 1000cc cars and local electric vehicles. **Roshan Apni Car**, for Roshan Digital Account holders, is regulated separately and has looser terms (see below).

The Rs 30 lakh cap is still in force. On 19 August 2026, Dawn reported that an auto sector expert had urged SBP to raise it to Rs 60 to 70 lakh; we found no SBP decision to do so as of 13 October 2026.

The cap matters more as car prices rise. With 30% down, Rs 30 lakh covers a car of up to about Rs 42.9 lakh. Above that, you pay everything over Rs 30 lakh yourself.

## Which bank is cheapest for a car loan?

The "approx. rate" column adds each bank's margin to 1-year KIBOR of 12.75% (12 October 2026). Your bank uses KIBOR from its own reference date, so your rate will differ.

| Bank and product | Type | Pricing | Approx. rate, Oct 2026 |
|---|---|---|---|
| Meezan Car Ijarah | Islamic lease | Fixed: 13.90% (1 yr) to 14.36% (5 yrs) | 13.90% to 14.36% |
| HBL CarLoan | Conventional | 11.99% fixed (campaign, see note) | 11.99% |
| UBL Drive | Conventional | KIBOR + 3.5% (existing customer), + 4% (new); or fixed 16.5% / 17% | 16.25% to 17% |
| MCB Car4U | Conventional | KIBOR + 4% (MCB account), + 4.5% (others) | 16.75% to 17.25% |
| Bank Alfalah Auto Loan | Conventional | KIBOR + 3.5% (2 yrs), + 4% (3 yrs), + 4.5% (4-5 yrs) | 16.25% to 17.25% |
| Bank AL Habib Apni Car | Conventional | KIBOR + 2.5% (1-2 yrs), + 3% (3 yrs), + 3.5% (4-5 yrs) | 15.25% to 16.25% |

**HBL's 11.99% may have ended:** HBL's CarLoan page still advertised 11.99% fixed on 12 October 2026. Its campaign terms say the offer ran from 19 August to 30 September 2026, and HBL may end it at any time. Ask for the rate in writing before you pay a deposit.

UBL adds 0.5% for any case that needs a deviation from its policy. Bank AL Habib charges 0.5% more if you haven't kept an account with it for 6 months. Bank Alfalah adds 1% if you finance the insurance and registration instead of paying them upfront.

**Two banks' figures are from archived pages:** Bank Alfalah's and Bank AL Habib's websites blocked our fetch on 13 October 2026. Their figures come from Internet Archive copies of their own pages, dated 12 January 2026 (Alfalah) and 19 May 2026 (AL Habib). AL Habib's pricing table carries a note that it applies to working women; its FAQ gives the same rates without that note.

## How much will the monthly installment be?

**Rs 40 lakh car, 30% down, 3 years at 16.25%:** About Rs 98,800 a month (Loan Rs 28 lakh at 1-year KIBOR 12.75% (12 Oct 2026) + 3.5%. Total markup about Rs 7.56 lakh. At the 40% limit you need about Rs 2.47 lakh a month in net income, with no other loans. Our calculation, before insurance; bank schedules differ.)

The same Rs 28 lakh at HBL's 11.99% fixed would be about Rs 93,000 a month. At Meezan's 3-year fixed rental of 14.30%, about Rs 96,100, before takaful.

Insurance is on top. HBL quotes an insurance rate of 1.4% with a free tracker, and wants the first year's premium paid upfront. For how car insurance is priced, see [car insurance in Pakistan](/money/guides/car-insurance-pakistan/).

## Who is eligible for a car loan?

| Bank | Age (at maturity) | Minimum income, salaried | Minimum income, self-employed |
|---|---|---|---|
| Meezan | 25 minimum; 60 (salaried), 65 (business) | Not stated; repayments within 40% of net take-home pay | Not stated; up to 50% for businessmen on cars up to 1000cc |
| HBL | 22 minimum; 60 or retirement (salaried), 70 (self-employed) | Rs 35,000 | Rs 35,000 |
| UBL Drive | 21 to 60 (salaried), 21 to 70 (self-employed) | Rs 35,000 gross | Rs 50,000 gross |
| MCB Car4U | 21 minimum; 65 (salaried), 70 (self-employed) | Rs 40,000 net | Rs 40,000 net |
| Bank Alfalah | 21 to 65 (private sector), 21 to 60 (government), 21 to 70 (self-employed) | Rs 30,000 gross | Rs 50,000 gross; Rs 1 lakh for business individuals (its calculator note) |

In the example above, the 40% rule asks for far more than any bank's income minimum. Meezan also checks your record on SBP's e-CIB (Electronic Credit Information Bureau) and wants no current default or overdue at approval.

Work history: Meezan asks salaried applicants for 2 years of continuous employment, MCB for 6 months, and Bank Alfalah for 6 months (permanent) or 1 year (contract). Meezan counts up to 50% of a spouse's verifiable income.

## What documents do I need?

Salaried applicants usually need:

- CNIC copy and 2 photos
- latest salary slip or salary certificate
- bank statements: 3 months at HBL, 6 months at UBL and Bank Alfalah

Self-employed applicants need 6 to 12 months of bank statements and proof of business; UBL also asks for tax returns or an NTN. Bank Alfalah asks every applicant to sign an SBP undertaking listing existing loans. If you are not yet a filer, see [how to become a filer](/business/guides/how-to-become-filer/).

## How does buying a car on bank installments work?

If the maker raises the price before delivery, the extra is yours to pay: Meezan and HBL both say so. HBL also passes any premium above the list price to you. You cannot sell the car during the loan without the bank's NOC (no-objection certificate), MCB's key fact statement says.

## Islamic car Ijarah vs a conventional car loan

In **Ijarah**, Meezan buys the car and leases it to you. You pay monthly rent, and at the end the car is sold to you for a token amount or gifted. A conventional loan lends you the money and charges markup.

The differences that cost money:

- **Rate:** Meezan's fixed rentals (13.90% to 14.36%) were below the floating conventional rates in our table in October 2026. HBL's 11.99% campaign was lower still.
- **Late payment:** HBL and MCB charge Rs 1,500 per late instalment. Meezan takes an agreed charity payment instead.
- **Paying early:** HBL charges 5% of the outstanding amount after delivery. MCB charges up to 8% in year 1, 6% in year 2 and 3.5% after that. Bank AL Habib allows two partial payments a year with no fee, minimum Rs 50,000.
- **Theft or total loss:** under Meezan's Ijarah, no rent is charged if the car is stolen or destroyed.

For a wider look at Islamic banks, see [Meezan Bank vs other banks](/money/guides/meezan-bank-vs-other-banks/).

## What fees do banks charge?

| Bank | Processing fee | Late payment |
|---|---|---|
| Meezan | Rs 3,800 + FED | Charity payment |
| HBL | Rs 13,000 + FED (Rs 6,500 for repeat customers) | Rs 1,500 |
| MCB | Rs 12,000 | Rs 1,500 |

HBL's fees are from its schedule of charges for July to December 2026; MCB's from its key fact statement of 3 November 2025. We found no fees on UBL's product page.

## Can I lower the monthly installment?

Yes, with a **residual value** option. You pay up to 50% of the price as one lump sum at the end, so the monthly instalments are smaller. UBL, MCB and Bank Alfalah offer it. Meezan's residual value Ijarah needs a 30% to 50% deposit and leaves 40% to 60% of the price at the end, depending on tenure.

## Can overseas Pakistanis buy a car on installment?

Yes, through **Roshan Apni Car**, for Roshan Digital Account holders. SBP treats it separately from ordinary car loans. Bank Alfalah's version, on its May 2025 page, lent up to Rs 75 lakh, from 15% down (for financing up to Rs 60 lakh), for 2 to 7 years, at 1-year KIBOR + 1%. It needed income of USD 3,000 a month (salaried) and a nominee in Pakistan.

See [investing through a Roshan Digital Account](/money/guides/roshan-digital-account-investment/) for how the account works.

After you buy, budget for [token tax in Punjab](/money/guides/token-tax-punjab/) every year.

More guides: [car insurance companies compared](/money/guides/car-insurance-companies-pakistan/), [home loans in Pakistan](/money/guides/home-loan-pakistan/), [salary tax calculator](/business/tools/salary-tax-calculator/), [Money](/money/).

## Questions people ask

### How much down payment do I need for a car on installment in Pakistan?

At least 30% of the car's value under SBP rules for ordinary bank car loans. Bank AL Habib asks for 35% on used cars.

### What is the maximum car loan in Pakistan?

Rs 30 lakh in total from all banks and DFIs at any time, under SBP's consumer financing rules. An auto sector expert urged SBP to raise it in August 2026 (Dawn), but we found no change as of October 2026.

### Can I get a car on installment without interest?

Islamic banks offer car Ijarah, a lease: you pay rent and the car passes to you at the end. Meezan's fixed rental rates ran from 13.90% (1 year) to 14.36% (5 years) in October 2026.

### Can overseas Pakistanis get a car on installment?

Yes, through Roshan Apni Car with a Roshan Digital Account, which SBP regulates separately. Bank Alfalah's version (May 2025 page) lent up to Rs 75 lakh, from 15% down (for financing up to Rs 60 lakh), for up to 7 years, at 1-year KIBOR + 1%.

### Can I finance a used car?

Yes. HBL, UBL, MCB, Bank Alfalah and Bank AL Habib finance used locally made cars. UBL takes cars up to 9 years old; Bank AL Habib up to 7 years (above 1000cc) or 5 years (up to 1000cc).

## Sources

- [BPRD Circular Letter No. 29 of 2021 (Internet Archive copy)](https://web.archive.org/web/20250619132327/https://www.sbp.org.pk/bprd/2021/CL29.htm), State Bank of Pakistan (accessed 13 Oct 2026)
- [BPRD Circular Letter No. 19 of 2022 (Internet Archive copy)](https://web.archive.org/web/20250619133822/https://www.sbp.org.pk/bprd/2022/CL19.htm), State Bank of Pakistan (accessed 13 Oct 2026)
- [KIBOR, 12 Oct 2026](https://www.sbp.org.pk/assets/document/kibor-rates-12-october-2026.pdf), State Bank of Pakistan (accessed 13 Oct 2026)
- [Car Ijarah](https://www.meezanbank.com/car-ijarah/), Meezan Bank (accessed 13 Oct 2026)
- [HBL CarLoan](https://www.hbl.com/personal/loans/hbl-car-loan), HBL (accessed 13 Oct 2026)
- [HBL CarLoan campaign terms, 19 Aug 2026](https://www.hbl.com/assets/documents/Terms_Conditions_-_Conventional_Campaign_19_Aug_26_Eng_Urdu.pdf), HBL (accessed 13 Oct 2026)
- [CarLoan Schedule of Bank Charges, Jul-Dec 2026](https://www.hbl.com/assets/documents/CarLoan_SOBC_July-Dec_2026.pdf), HBL (accessed 13 Oct 2026)
- [UBL Drive](https://www.ubldigital.com/Loans/Consumer-Loans/UBL-Drive), UBL (accessed 13 Oct 2026)
- [Car4U](https://www.mcb.com.pk/personal/consumer-loans/car4u), MCB Bank (accessed 13 Oct 2026)
- [Key Fact Statement: Auto Finance, 3 Nov 2025](https://www.mcb.com.pk/assets/documents/Auto-Key-fact-Statement-Standard-3-Nov-2025-New-11-Font-English.pdf), MCB Bank (accessed 13 Oct 2026)
- [Auto Loan (Internet Archive copy, 12 Jan 2026)](https://web.archive.org/web/20260112204759/https://www.bankalfalah.com/personal-banking/loans/auto-loan/), Bank Alfalah (accessed 13 Oct 2026)
- [Apni Car (Internet Archive copy, 19 May 2026)](https://web.archive.org/web/20260519043406/https://www.bankalhabib.com/apni-car), Bank AL Habib (accessed 13 Oct 2026)
- [Roshan Apni Car (Internet Archive copy, 16 May 2025)](https://web.archive.org/web/20250516161846/https://www.bankalfalah.com/personal-banking/loans/alfalah-roshan-apni-car-for-roshan-digital-account-holders), Bank Alfalah (accessed 13 Oct 2026)
- [Auto loans swell to Rs386bn](https://www.dawn.com/news/2023803), Dawn (accessed 13 Oct 2026)