Car finance is a service that allows you to lease a car through a bank. It means taking out a loan to pay for the car and repaying it over time. When you take out a car loan, you have to pay interest and any fees in addition to the loan amount within a certain time frame.
Although this is true, not everyone in Pakistan knows how to apply for a car loan. In this article, we will guide you through the basic and straightforward stages of how to finance a car in Pakistan.
How does car financing work?

If you want to finance a car, you don’t have to save for years to be able to buy a car. You can buy a car immediately with a small down payment and pay the remaining amount over time with a monthly payment plan.
You select the car you wish to purchase and apply for car financing at a financial institution or bank. When your application is approved, the institution purchases the car on your behalf, then you take the car home. In return, you pay the loan back to the lender or bank over the time period.
Loan Payment works in such a way that the bank or financial institution takes a down payment of a certain percentage of the price of the car and then lets you pay the remaining amount in monthly installments. You will pay the fixed monthly installments until you until you’ve paid off the loan in full.
What kinds of cars can be leased?
All types of cars, new, used, and foreign, can be leased through a bank or other financial institution. Car financing is available for any new vehicle. There is a time limit on used or imported cars. A car that is more than seven years old cannot be imported.
Eligibility Criteria for Car Financing:
In order to obtain a vehicle through the car finance services in Pakistan, you must meet the following eligibility criteria:
- You must have a Pakistani national identity
- If you are a salaried employee, you must be between the ages of 21 to 60 years, and if you are self-employed or a businessman, you must be between the ages of 21 to 65 years.
- You must have a monthly income of at least PKR 25,000 rupees.
- If you’re an employee, you must have a job duration of at least 3 months and if you are self-employed or a businessman, your business duration must be at least 6 months.
Documents Required for Car Financing:

You will need some documents to apply for a car loan. The required documents are as follows:
- Photocopieses of national identity card
- Passport size photographs
- Salary slips of the salaried persons or valid business proof for businessman
- Bank statement for a specific past term to determine fixed income
- Complete and duly signed application form branch
Process of Car Financing:

Even though the car Finance process differs from one bank to the next, but usually it follows the same method. The method, documentation, and eligibility criteria for both new and used car financing are largely the same, with minor variations from bank to bank. We’ve outlined basic and general methods for applying for a car loan here.
Step 1. For the purpose of the car financing process, banks generally ask an applicant to meet certain eligibility criteria, submit documents and provide financial security. When you’ve submitted all of the required documents after assuring your eligibility criteria.
Step 2. After that, the bank forwards the financing case for further process and approval. This entails the verification of the case Pre-approval inspections must be established to assure financial stability and reduce bank risk.
Step 3. The bank verifies the applicant’s financial situation. Depending on the bank, the process could take time period from a few days to a few weeks. It is depending on the choice or process of the bank.
Step 4. When your application is approved, the bank will ask you to make the required upfront installments as per your case.
Step 5. After successful completion of the required advance payment, the bank arranges the car and delivers it to the customer.
Car Finance Limit:
The car finance limit varies from bank to bank, but most banks have a car finance limit of PKR 2 lacs to 50 lacs. It means that a car must cost a minimum of 2 lacs and a maximum of 50 lacs to be leased through a bank.
What is the down payment amount?
When you are financing a new car, then the amount of the down payment will be at least 15 percent of the car’s cost. If you are leasing or financing a used car, the minimum down payment will be 20 percent of the vehicle’s price.
How Much Car Financing Interest Do You Have to Pay?
The interest rates on car loans differ from one bank to the next. However, depending on the duration of financing, the interest is basically between 17 and 21 percent.
Which car financing banks are operating in Pakistan?
Meezan car financing, Allied Car financing, HBL Car Financing, Dubai Islamic Bank Car Financing, Bank Alfalah, UBL, and Faisal Bank Car Financing are some popular car finance options in Pakistan that are offering cars in installments.