# Car loan in Pakistan 2026: SBP limits, KIBOR rates, documents and a worked instalment

Source: Searchable (https://searchable.pk/guides/cars/car-loan-in-pakistan)
Type: Guide
Author: Searchable Editorial
Published: 18 Oct 2026
Updated: 18 Oct 2026
Retrieved: 19 Oct 2026

> The State Bank caps car finance at Rs 3 million per person with at least 30% down. Here is how banks price a car loan off KIBOR, what they ask for, and what a loan costs a month at today's rate.

**A car loan in Pakistan in 2026 is capped at Rs 3 million per person across all banks, needs at least 30% down, and runs for at most 3 years on a car above 1000cc or 5 years on a locally made car up to 1000cc.** Banks price it at 1-year KIBOR plus a margin: with 1-year KIBOR at 12.77% on 18 October 2026, that puts most new car loans between about 15.3% and 18.3% a year. This guide sets out the State Bank of Pakistan (SBP) rules, how two banks price their loans, the documents to gather, and what a loan costs you each month.

## The SBP rules on car loans in Pakistan

The limits come from the SBP's Prudential Regulations for consumer financing, tightened in September 2021 and again in May 2022, [as Dawn](https://www.dawn.com/news/1648050/sbp-puts-brakes-on-financing-for-imported-vehicles) and [Business Recorder](https://www.brecorder.com/news/amp/40175516) reported at the time. Dawn reported in [November 2025](https://www.dawn.com/news/1955747) that the Rs 3 million cap and the 30% down payment were still in force, and the banks' own product pages still apply them in October 2026.

| Rule | Limit |
|---|---|
| Total car finance per person, all banks combined | Rs 3,000,000 |
| Minimum down payment | 30% of the car's price |
| Maximum tenure, car above 1000cc | 3 years |
| Maximum tenure, locally made car up to 1000cc | 5 years |
| Debt burden (all loan repayments as a share of net income) | Up to 40% |
| Imported cars | Not financed under the 2021 rules |

The 2021 rules exempted locally made cars up to 1000cc and locally made electric vehicles from the stricter terms. The Rs 3 million cap is per person, not per car: if you already have a car loan outstanding, it counts against the same limit.

The Roshan Apni Car scheme for Roshan Digital Account holders (overseas Pakistanis) runs under its own SBP treatment, which the May 2022 change left in place, so banks offer larger limits there.

## How the rate is set: KIBOR plus a spread

Most conventional car loans float on the 1-year Karachi Interbank Offered Rate (KIBOR). The bank adds a spread that depends on the tenure and on how long you have banked with it. Follow the rate on our [KIBOR page](/data/kibor-1y) and the [SBP policy rate page](/data/sbp-policy-rate); the SBP held the policy rate at 11.5% on 14 September 2026 and meets again on 26 October.

What two banks publish on their own product pages (checked 18 October 2026):

| Bank | Tenure | Price |
|---|---|---|
| [Bank Alfalah Auto Loan](https://bankalfalah.com/personal-banking/loans/auto-loan/) | 2 years | KIBOR + 3.50% |
| Bank Alfalah | 3 years | KIBOR + 4.00% |
| Bank Alfalah | 4 to 5 years (up to 1000cc) | KIBOR + 4.50% |
| [Bank AL Habib (Woman Apni Car)](https://new.bankalhabib.com/financing-detail/alhabib-woman-apni-car) | 1 to 2 years | KIBOR + 2.5% to 4.5% |
| Bank AL Habib | 3 years | KIBOR + 3% to 5% |
| Bank AL Habib | 4 to 5 years | KIBOR + 3.5% to 5.5% |

Bank Alfalah applies the 1-year KIBOR of the 1st of each month to that month and adds 1% when you defer the insurance and registration into the instalments. Bank AL Habib charges 0.5% more if you have not kept an account with it for six months, and asks for at least 35% down on a used car.

Islamic banks offer the same car through Ijarah, a lease: the bank buys the car, you pay a monthly rental, and the car passes to you at the end. [Meezan Bank's Car Ijarah page](https://www.meezanbank.com/car-ijarah/) explains the structure and its Takaful (Islamic insurance) cover; ask the branch for the rental rate that applies to a resident customer, since the page also carries terms for Roshan Digital Account holders.

## A worked instalment at today's KIBOR

These use 1-year KIBOR of 12.77% (18 October 2026) and the banks' published spreads. Your bank may fix a different KIBOR date.

**A Rs 3.5 million car up to 1000cc, 30% down (Rs 1,050,000), Rs 2,450,000 financed over 5 years:**

| Rate | Monthly instalment | Total markup over 5 years |
|---|---|---|
| 16.27% (KIBOR + 3.5%) | Rs 59,931 | Rs 1,145,877 |
| 17.27% (KIBOR + 4.5%) | Rs 61,245 | Rs 1,224,704 |

**A Rs 6 million car above 1000cc, Rs 3 million financed (the cap) over 3 years, so Rs 3 million down:**

| Rate | Monthly instalment | Total markup over 3 years |
|---|---|---|
| 15.77% (KIBOR + 3%) | Rs 105,131 | Rs 784,707 |
| 16.77% (KIBOR + 4%) | Rs 106,615 | Rs 838,143 |

Insurance, registration and token tax come on top. Run your own price, down payment and rate through our [car loan calculator](/tools/cars/car-loan-calculator), then add the [car registration tax](/tools/cars/car-registration-tax-calculator) and [token tax](/tools/cars/token-tax-calculator) for your province.

## Who qualifies

The banks set their own floors. From their product pages:

- **Bank Alfalah:** salaried applicants need a gross salary of at least Rs 30,000 a month and six months of work experience (one year if contractual), aged 21 to 65 at maturity (60 for government staff). Self-employed applicants need at least Rs 50,000 a month and one year in the business, aged 21 to 70 at maturity. The page lists higher figures in its disclaimer, so confirm at the branch.
- **Bank AL Habib:** aged 23 to 60 at maturity for salaried and 23 to 65 for self-employed applicants, a satisfactory credit history, and one year of permanent employment (two years if contractual).

Every bank checks your record with the SBP's credit bureau (eCIB). A default or overdue payment elsewhere is the most common reason for a refusal.

## Documents to gather

1. Signed application form and a copy of your CNIC.
2. Two recent passport-size photographs.
3. The SBP undertaking, a declaration of every loan and monthly commitment you already have.
4. **Salaried:** latest salary slip or employment letter, and six months of bank statements.
5. **Self-employed or business:** six months of bank statements and proof of the business (Bank AL Habib asks for two years).
6. **Rental income:** a rent agreement valid for at least the next three months, the property title and six months of statements.
7. **Remittance income:** proof of the job abroad, the sender's passport with at least three months left on the visa, and six months of remittance slips or statements.
8. **The car:** the dealer's booking or proforma invoice for the exact model.

## How to apply, step by step

1. **Fix your budget first.** Keep all loan instalments under 40% of your take-home pay, the SBP's debt burden limit. On Rs 150,000 a month that is Rs 60,000 for every loan together.
2. **Choose the car and tenure.** Above 1000cc you get three years at most, so the instalment is roughly 45% higher than on a five-year loan of the same amount.
3. **Get quotes from three banks.** Ask each for the spread over KIBOR, the KIBOR reset date, the processing fee and the early settlement charge in writing (the key fact statement).
4. **Apply with the documents above** at the branch or through the bank's online form.
5. **Pay the down payment, processing fee and first-year insurance** once the loan is approved.
6. **Take delivery.** The bank keeps its lien on the car (or, under Ijarah, owns it) until the last instalment.
7. **Clear the bank's lien** after the final payment: ask the bank for its clearance letter and have the registration updated at your provincial excise office.

## Mistakes that cost money

- **Reading the rate as fixed.** A KIBOR loan reprices. Every 1 percentage point rise adds about Rs 1,500 a month to a Rs 3 million, 3-year loan.
- **Ignoring the cap.** An existing car loan, even a small one, counts against the Rs 3 million limit across all banks.
- **Comparing instalments only.** A longer tenure lowers the instalment and raises the total markup. Compare the total.
- **Forgetting the extras.** Insurance, registration, token tax and the withholding tax a non-filer pays on registration are not in the instalment. Check your filer status first with our guide to the [withholding tax rates for filers and non-filers](/guides/taxes/withholding-tax-rates-filer-vs-non-filer).
- **Missing the account bonus.** Some banks, Bank AL Habib among them, price lower for customers who have banked with them for six months.

For what the next SBP decision could do to a floating instalment, see our explainer on [what the 11.5% policy rate means for car loans](/news/economy/sbp-holds-policy-rate-at-11-5-percent-car-loans-home-loans-savings), and for the latest lending figures, [car loans reaching Rs 407 billion in September](/news/auto/car-loans-in-pakistan-reach-rs-407-billion-in-september-a-22nd-straight-monthly).

## Frequently asked questions

**What is the maximum car loan in Pakistan?**

Rs 3 million per person across all banks and DFIs combined, under the SBP's prudential regulations. The Roshan Apni Car scheme for Roshan Digital Account holders has its own limits.

**How much down payment is needed for a car loan in Pakistan?**

At least 30% of the car's price. Some banks ask for more on a used car; Bank AL Habib asks for 35%.

**What is the longest car loan tenure in Pakistan?**

Five years for a locally made car up to 1000cc and three years for a car above 1000cc.

**What is the car loan interest rate in Pakistan today?**

Most conventional banks charge 1-year KIBOR plus 2.5% to 5.5%. With KIBOR at 12.77% on 18 October 2026, that is about 15.3% to 18.3% a year.

## Sources

- SBP puts brakes on financing for imported vehicles (24 Sep 2021) (Dawn): https://www.dawn.com/news/1648050/sbp-puts-brakes-on-financing-for-imported-vehicles
- SBP tightens auto finance: tenure cut, Rs 3 million cap (25 May 2022) (Business Recorder): https://www.brecorder.com/news/amp/40175516
- Auto financing hits Rs315bn amid cheaper rates (18 Nov 2025) (Dawn): https://www.dawn.com/news/1955747
- Auto Loan: tenure, pricing, eligibility and documents (checked 18 Oct 2026) (Bank Alfalah): https://bankalfalah.com/personal-banking/loans/auto-loan/
- AlHabib Apni Car: pricing, down payment and documents (checked 18 Oct 2026) (Bank AL Habib): https://new.bankalhabib.com/financing-detail/alhabib-woman-apni-car
- Car Ijarah (checked 18 Oct 2026) (Meezan Bank): https://www.meezanbank.com/car-ijarah/
- KIBOR rates (State Bank of Pakistan): https://www.sbp.org.pk/ecodata/kibor_index.asp

How to cite: "Car loan in Pakistan 2026: SBP limits, KIBOR rates, documents and a worked instalment", Searchable, 18 Oct 2026, https://searchable.pk/guides/cars/car-loan-in-pakistan