Car finance is a service that lets you lease a car through a bank. You choose the car you want to buy and apply for car finance at a bank. On approval of your application, the bank pays for the car on your behalf, you take the car home and pay the amount back over a period of time.
This is how the payment works: the bank takes a certain percentage of the car’s price as a down payment and then lets you cover the rest in monthly installments. You pay the down payment immediately and a fixed amount of installment every month until the loan is settled.
With car financing, you don’t have to wait for years to have enough savings to buy a car. You can get the car right away with a bit of cash (down payment) and pay the rest with a monthly installment plan.
What is the eligibility criteria for car finance?
To get a car with car finance service in Pakistan, you have to
- Be a Pakistani citizen
- Have a monthly income of at least PKR 25,000
- Be aged between 21-60 if you are a salaried employee, aged between 21-65 if you are self-employed or a businessman
- Have a job duration of at least 3 months or a business duration of at least 6 months
What types of cars can be leased through a bank?
You can lease all types of vehicles, new, used, and imported. You can get car finance for any new car. In case of used or imported vehicles, there’s a time limit. You cannot import a used or imported vehicle that is older than 7 years.
Is there a car finance limit?
Yes, the car finance limit, for most banks, is PKR 2 lacs to 50 lacs. That means, to lease a car through a bank, the car price must be a minimum of 2 lacs and a maximum of 50 lacs.
What about the time limit for car finance? Is there any?
Yes, you have to return the finance money within a time period of 1-7 years. You can choose an installment plan that best suits your needs.
How much for the down payment?
If you are leasing a new car, the down payment will be a minimum of 15% of the car’s price. In case of a used car, the minimum down payment will be 20%.
What about the monthly payments?
According to the State Bank of Pakistan, a person can pay a maximum of 50% of his monthly income to the bank. So, the monthly installments depend on how much you are earning and how much you can afford to pay the bank (can’t be more than 50%).
Are there any additional charges other than the down payment and monthly installments?
Other than the down payment and monthly installments, you have to pay the bank processing fee of around PKR 8k-9k. Then, there are the car insurance charges that vary from bank to bank.
Does the bank cover car insurance in the finance plan?
Car insurance service goes hand to hand with car finance. Every bank covers insurance in the finance plan. Banks have different insurance companies on their panels.