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Car Financing at Two-Year-Low Due to Economic Chaos

Auto financing is barely hanging on due to skyrocketing inflation, increased restrictions on auto loans, and massive production cuts.

While the decline is gradual, there is a significant difference between auto financing in January 2023 – when the auto loan stood at around Rs. 330 billion – and March 2023.

According to the most recent report, auto financing totaled Rs. 309 billion in April 2023, recording a 2.5% month-over-month (MOM) decline and a 15.7% year-over-year (YOY) decline.

Arif Habib Limited (AHL) reported that auto financing had reached its lowest level since July 2021. It is also worth noting that this year’s decline is larger in terms of the MOM percentage compared to the previous ones. However, experts reckon car loans will possibly resurge once the economy stabilizes.

Auto Financing Rendered Futile

A common consensus among the buyers suggests that the State Bank of Pakistan’s (SBP’s) restrictions have rendered it impossible to obtain favorable car financing terms.

For instance, if someone buys an economy car that costs around Rs. 3.8-4 million, and pays about Rs. 1.5 million upfront, then their monthly installment will be in the neighborhood of Rs. 100,000, which is massive.

If that person waits and saves up Rs. 100,000 every month for 2 years then there is no need for financing. The last year is just to pay the markup, which makes the entire auto financing facility futile.

  • After 2 years of saving 24 lacs car price go high on 8 million. Pichlay 2 saalu say yehi tu tamasha laga hay yahan.10 lakh ke car 4 million ke hu gye hay

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