Pakistan’s auto loan sector has experienced its 11th consecutive month of growth, with the total outstanding loans reaching Rs315.4 billion by the end of October, up from Rs305 billion in September, according to data released by the State Bank of Pakistan (SBP).
This marks a 3.4% month-on-month increase, continuing a steady upward trend in auto financing. Despite the growth, the sector is still below the record high of Rs368 billion seen in June 2023.
The rise in auto loans comes amid a reduction in the policy rate from 22% to 11% in June 2024. Banks continue to offer competitive financing packages with interest rates below 10%, which, combined with rising demand for small cars, has helped maintain steady demand for auto loans.
However, the sector is still restricted by the Rs3 million cap on auto loans and other conditions, including a 30% down payment and shorter loan tenures for smaller vehicles. Additionally, shorter loan tenures, five years for cars under 1,000cc and three years for smaller vehicles, are seen as barriers to financing.
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