# Car Financing Calculator Pakistan

Source: Searchable (https://searchable.pk/tools/cars/car-loan-calculator)
Type: Calculator
Rates reviewed: 15 Sept 2026
Retrieved: 15 Sept 2026

Work out your monthly car loan installment, total mark-up and total cost for bank car financing or Meezan car Ijarah at KIBOR-linked rates.

Version 1.0.0. Inputs: Car price, Down payment, Annual mark-up rate, Tenure, Processing fee.

## Worked example (default inputs)

- Car price: 4500000 PKR
- Down payment: 30 %
- Annual mark-up rate: 15.3 %
- Tenure: 5
- Processing fee: 10000 PKR

**Monthly instalment: Rs 75,435**

Financing Rs 3,150,000 over 60 months at 15.3% costs Rs 1,376,114 in mark-up. The car ends up costing Rs 5,886,114, 30.6% more than the cash price.

### Loan

- Car price: Rs 4,500,000
- Down payment (30%): Rs 1,350,000
- Amount financed: Rs 3,150,000

### Cost of financing

- 60 instalments of: Rs 75,435
- Total mark-up: Rs 1,376,114
- Mark-up in first year: Rs 450,970
- Processing fee: Rs 10,000
- Total cost of car: Rs 5,886,114

## How it is calculated

The instalment uses the standard reducing-balance (amortising) formula:

*instalment = P × r ÷ (1 − (1 + r)^−n)*

where **P** is the amount financed, **r** the monthly rate (annual ÷ 12) and **n** the number of months. Each payment covers that month's mark-up on the remaining balance first; the rest reduces the principal, so early payments are mostly mark-up.

Islamic products (Ijarah / Diminishing Musharakah) are structured differently in contract but usually produce a comparable monthly figure at a comparable profit rate, so this calculator is a fair estimate for both.

## Frequently asked questions

**What rate do banks charge for car loans?**

Most conventional car loans are priced at 1-year KIBOR plus a spread of 2–4%. Islamic banks quote a profit rate that tracks the same benchmark.

**Is a bigger down payment better?**

A larger down payment reduces both the instalment and total mark-up. Banks reward it with lower spreads too.

**Can I pay off early?**

Yes, most banks allow early settlement after a lock-in period (often 1 year) with a small penalty of 1–3% of the outstanding amount.

**Does this include insurance?**

No. Comprehensive insurance is mandatory during the loan and costs roughly 2–3.5% of the vehicle value per year.

## Sources

- Standard amortisation formula; KIBOR reference from SBP (State Bank of Pakistan): https://www.sbp.org.pk/

How to cite: "Car Financing Calculator Pakistan", Searchable, rates reviewed 15 Sept 2026, https://searchable.pk/tools/cars/car-loan-calculator