Owning a car in Pakistan has become a necessity rather than a luxury, especially in large cities like Karachi, Lahore, and Islamabad, where public transport options are limited. However, with car prices rising every year, most people cannot afford to purchase a new or used vehicle with a lump sum payment. This is where car financing in Pakistan comes in.
Banks and Islamic financial institutions offer different auto loan plans that allow you to buy your desired car with easy monthly installments. In this guide, we’ll explain how car financing works, the eligibility criteria, documents required, and compare the best banks for car financing in Pakistan in 2025.
📌 What is Car Financing?
Car financing (also called auto loan or auto finance) is a service provided by banks where you borrow money to purchase a car and pay it back in monthly installments. The installment usually includes:
- Principal amount (the actual car price financed by the bank).
- Interest/Profit charged by the bank.
Depending on the bank and type of financing, you can finance brand new cars, used cars, or imported vehicles.
📊 Eligibility for Car Financing in Pakistan
While each bank has its own requirements, the general conditions are:
- Applicant must be a Pakistani citizen with a valid CNIC.
- Minimum age: 21 years; Maximum age: 60–65 years (depending on employment type).
- Minimum monthly income requirement:
- Salaried individuals: Rs. 30,000–50,000
- Business/Self-employed: Rs. 50,000–75,000
- A good credit history (no defaults or late payments).
📑 Documents Required for Car Loan
When applying for car financing in Pakistan, you will need:
- Copy of CNIC (applicant & co-applicant, if any).
- Salary slips (for salaried persons).
- Bank statements for last 6–12 months.
- NTN and business proof (for self-employed individuals).
- Quotation/proforma invoice of the car from the dealership.
- Photographs (passport size).
🏦 Best Banks for Car Financing in Pakistan (2025)
Here’s a list of some of the most popular banks offering auto financing:
1. Habib Bank Limited (HBL Car Loan)
- Financing available for new and used cars.
- Loan tenure up to 7 years.
- Down payment starts from 15–20%.
2. Meezan Bank Car Ijarah (Islamic Financing)
- Shariah-compliant leasing model.
- Flexible tenure (up to 5 years).
- Option to purchase the car at the end of the lease period.
3. Bank Alfalah Auto Loan
- Financing up to 85% of car value.
- Loan tenure between 1 to 7 years.
- Available for both salaried and self-employed individuals.
4. UBL Drive Auto Loan
- Fast approval process.
- Flexible installment plans up to 7 years.
- Both new and used cars eligible.
5. Faysal Bank Auto Finance
- Financing available for cars up to 5 years old.
- Loan tenure of up to 6 years.
- Option for Islamic auto finance.
6. Askari Bank Car Financing
- Available for new and used cars.
- Competitive interest/profit rates.
- Easy documentation process.
💰 Car Financing Interest Rates in Pakistan
Car loan rates vary depending on the bank and whether you choose conventional financing or Islamic financing.
- Conventional banks charge interest rates of around 18%–22% annually.
- Islamic banks (e.g., Meezan, Bank Islami) use profit-based models under Shariah-compliant leasing contracts.
- Down payment usually starts from 15% to 30% of the car value.
📌 Car Financing for New vs. Used Cars
- New Cars: Easier approval, longer repayment tenure (up to 7 years), lower down payment.
- Used Cars: Limited to cars usually less than 5–7 years old, higher down payment, shorter repayment tenure.
🎯 Tips Before Applying for Car Financing
- Compare interest/profit rates of different banks.
- Decide between Islamic auto finance vs conventional loan based on your preference.
- Consider total repayment cost (sometimes monthly installment looks small, but the total cost is much higher).
- Check your eligibility first to avoid rejection.
- Always read the fine print about insurance, early settlement charges, and processing fees.
✅ Benefits of Car Financing in Pakistan
- Easy access to brand new or used cars without full upfront payment.
- Flexible repayment options (1 to 7 years).
- Salaried and self-employed individuals both eligible.
- Option for Islamic Shariah-compliant car finance.
📌 Conclusion
Car financing in Pakistan has made it easier for people to own their dream cars without paying the full amount at once. With banks like HBL, Meezan, Alfalah, UBL, and Faysal Bank offering competitive financing options, you can select the plan that best matches your income and budget.
If you prefer Shariah-compliant options, banks like Meezan Bank Car Ijarah and Bank Islami are excellent choices. On the other hand, conventional banks provide more flexible terms and longer tenures.
Before applying, always calculate your monthly installment and total repayment using an online Car Loan Calculator Pakistan. This will help you make an informed financial decision and choose the best car financing plan for your needs.