Auto Loans Climb for 11th Straight Month

Auto financing in Pakistan grew for the 11th consecutive month, reaching Rs. 315.4 billion by the end of October 2025, up from Rs. 305 billion in September, according to data from the State Bank of Pakistan (SBP) and Arif Habib Limited. This marks a 33.7% year-on-year increase from Rs. 236 billion in October 2024, and a 3.5% rise month-on-month. The sustained growth in auto financing comes as the central bank’s policy rate dropped to 11% in June 2024, down from 22% earlier in the year. The lower interest rate environment has revived demand for auto loans, which are gradually approaching the record high of Rs. 368 billion set in June 2023. Industry analysts attribute the rising demand to a combination of factors, including increased consumer interest in small cars, particularly the Suzuki Alto 660cc and imported second-hand vehicles, as well as the launch of new models by both new entrants and established assemblers. Attractive financing packages from banks and car manufacturers, with interest rates below 10%, have further fueled the trend. Despite the positive momentum, the market continues to face constraints. The existing cap of Rs/ 3 million on auto loans, a 30% down payment requirement, and shorter loan tenures, five years for vehicles up to 1,000cc and three years for smaller cars, are limiting higher-end financing and discouraging some potential borrowers. Looking ahead, analysts expect auto financing to remain in high demand, provided interest rates remain stable or decline further and consumer appetite for small and affordable vehicles continues to grow.