Auto financing in Pakistan continued its upward trend in January 2026, rising to Rs. 328 billion, up from Rs. 242 billion in the same month last year, according to data compiled by Arif Habib Limited, citing the State Bank of Pakistan.
This represents a strong year-on-year increase of 35.8 percent. On a month-on-month basis, auto financing also rose by 2.8 percent compared to December, indicating continued momentum in consumer demand.
The January figure reflects a sustained recovery in car financing, with volumes steadily increasing after a period of slowdown during high interest rates. The latest data shows auto loans climbing back toward earlier peak levels, supported by improving market conditions.
Industry analysts attribute the growth largely to a relatively favorable interest rate environment, as easing borrowing costs have encouraged consumers to return to auto financing.
Demand for smaller and fuel-efficient vehicles continues to drive this trend. Entry-level cars and used imports remain popular choices among buyers, particularly in a price-sensitive market.
Banks have also played a role by offering more flexible financing options, including relatively lower markup rates and easier repayment structures, helping boost loan uptake.
Despite the recovery, auto financing remains below its peak of around Rs. 368 billion recorded in mid 2023. Factors such as loan caps, higher down payment requirements, and shorter tenures continue to limit faster growth.