Car Loans Surge to Record-High in Pakistan After Big Increase in Vehicle Sales

Automobile financing in Pakistan rose for the 18th consecutive month, reaching a record Rs. 369.12 billion despite an increase in the policy rate to 11.5 percent in April.

According to State Bank of Pakistan data, auto financing increased from Rs. 359.5 billion at the end of April and surpassed the previous peak of Rs. 368 billion recorded in June 2022.

The continued growth suggests that higher borrowing costs have not significantly affected demand for vehicle financing.

Consumers still consider prevailing lending rates manageable, while attractive financing packages offered by banks and automakers have helped sustain demand.

Interest in newly launched models, including hybrid and electric vehicles, has also supported financing activity as elevated petrol and diesel prices encourage buyers to consider more fuel efficient options.

Sales of cars, sport utility vehicles, pickups, and vans stood at 17,660 units in May, up 19 percent from a year earlier, although down 20 percent from April. Total sales during the first 11 months of fiscal year 2025-26 reached 183,704 units, marking a 45 percent increase from the same period last year.

Auto sales are expected to remain strong in the coming months as imports of semi knocked down and completely knocked down kits by local assemblers nearly doubled to $1.877 billion during July to May FY26 from $949 million a year earlier.