Auto financing in Pakistan continued its upward trend for the 12th straight month, with total car loans rising to Rs318 billion in November, up from Rs315.4 billion in October, according to the State Bank of Pakistan. Despite the steady growth, analysts say financing levels are still well below the 2022 peak and require policy support to fully recover.
Auto loans reached their highest level of Rs368 billion in June 2022, when annual car sales stood at around 240,000 units. Since then, high interest rates and economic pressures slowed demand, sharply reducing financing activity across the auto sector.
Market experts attribute the recent recovery to a significant reduction in interest rates, with the policy rate cut from 22% in June 2024 to 11% by May. The SBP’s latest 50 basis point cut on December 15 is expected to further ease borrowing costs and support demand in the coming months.
An industry analyst said,
“Lower interest rates have revived buyer interest, but financing volumes are still far from historic levels.”
Despite improving conditions, the Rs3 million cap on auto loans continues to limit financing options amid rising vehicle prices. Analysts have called for revising the cap upward to better reflect current market costs. Meanwhile, auto sales during the first five months of FY26 surged 48% year-on-year to 75,042 units, driven by improved macroeconomic conditions and new vehicle launches.