Car Loan in Pakistan 2026: Bank Rates, SBP Rules & Process

Updated on October 23, 2026

LoanHissab note: This guide is for education and estimation only. Rates, fees, taxes and eligibility can change. Always confirm the final terms directly with your bank before applying.

Buying a car on a loan in Pakistan is not complicated once you know the rules banks have to follow. Most of the confusion comes from walking into a showroom without knowing them, and finding out at the bank that the car you picked needs far more cash upfront than you expected.

The State Bank rules every car loan follows

Every bank in Pakistan works within the same State Bank rules:

Rs 30 lakh limit. One person can hold at most Rs 30 lakh of car finance across all banks combined, and any car loan you already have counts towards it.
Down payment. At least 15 percent for locally made cars up to 1000cc, such as the Alto, Cultus, Wagon R and Picanto. At least 30 percent for cars above 1000cc and for imported cars.
Loan term. Up to five years for cars up to 1000cc. Up to three years for bigger cars.
Your salary. Keep all your installments together within 40 percent of your monthly income.

The Rs 30 lakh limit surprises a lot of buyers. Take a Rs 47 lakh Honda City. The 30 percent minimum down payment is about Rs 14 lakh, but the bank still can’t lend more than Rs 30 lakh, so you actually need over Rs 17 lakh in cash.

What banks are charging right now

Here is what a Rs 20 lakh loan over five years looks like at eight banks, using indicative rates from our September 2026 rate sheet:

Bank	Islamic rate	Monthly (Islamic)	Conventional rate	Monthly (conventional)	Upfront fees (approx.)
Bank of Punjab	14.40%	Rs 46,952	14.10%	Rs 46,640	Rs 23,000
Meezan Bank	14.65%	Rs 47,213	Islamic only	Islamic only	Rs 2,500
Dubai Islamic Bank	14.65%	Rs 47,213	14.85%	Rs 47,423	Rs 30,000
Faysal Bank	14.90%	Rs 47,475	15.10%	Rs 47,685	Rs 30,000
Bank Alfalah	15.15%	Rs 47,737	14.85%	Rs 47,423	Rs 20,000
HBL	15.40%	Rs 48,001	15.10%	Rs 47,685	Rs 32,000
UBL	15.65%	Rs 48,265	15.35%	Rs 47,948	Rs 12,000
MCB	15.65%	Rs 48,265	15.35%	Rs 47,948	Rs 32,000

The monthly gap between the cheapest and the most expensive bank is about Rs 1,600, which adds up to almost Rs 1 lakh over five years. The fees vary even more: Meezan charges a flat Rs 2,500, while HBL and MCB charge around Rs 32,000.

Keep an eye on KIBOR, the benchmark many banks price car loans on. It rose to 12.73 percent for one year on the State Bank’s sheet of 9 October 2026, from 12.31 percent in mid-September. If your bank links its rate to KIBOR, a new quote may come in slightly above this table. As a rough guide, every half a percent adds about Rs 520 a month on a Rs 20 lakh, five year loan.

Costs that come on top of the installment

The installment is only part of what a car costs you. Budget for these too:

Processing fee, which varies a lot by bank, as the table shows.
Insurance or takaful, roughly 2 to 3 percent of the car’s value in the first year.
Withholding tax at registration. It depends on engine size, and non-filers usually pay about double what filers pay.
Registration and token tax, set by your province.
A tracker, which some banks include and others charge for every year.
Petrol. At Rs 398.30 a litre, OGRA’s price on 9 October 2026, driving 1,000 km a month costs about Rs 22,100 in an Alto and Rs 28,500 in a City. Cars up to 800cc, like the Alto, can get discounted petrol on up to 30 litres a month under the government’s Petrol Relief Scheme.

Our guide to the true cost of owning a car adds all of this up for four popular cars.

The process, step by step

Work out your installment and the cash you need with the Car Loan Calculator. It applies the SBP rules for you.
Get an official quotation from an authorised dealer for the exact model.
Apply at one or two banks. Start with the bank where your salary comes in.
The bank verifies your income and checks your credit record. This usually takes one to two weeks.
Once approved, you pay the down payment and the first insurance premium, and sign the agreement.
The bank pays the dealer directly. Delivery depends on the model’s availability.

Islamic or conventional?

Islamic car finance is usually ijarah: the bank buys the car and rents it to you, and ownership passes to you at the end. Conventional loans charge interest on the amount you owe. As the table shows, the monthly numbers are very close. We compared five banks on the same car in Islamic or conventional car finance: is Ijarah really cheaper?

Three tips before you sign

Compare the total cost, not just the installment. A lower rate with a high fee can cost you more.
Ask whether the rate is fixed or variable. With KIBOR moving, it matters.
Don’t borrow the maximum. Petrol, insurance and servicing all come out of the same salary as the installment.

Bank rates were checked in September 2026. KIBOR and petrol prices were checked on 12 October 2026. Your bank’s written offer is always the final word.