Car Financing Calculator
YOUR CAR
Bank finance for a car
That is Rs 1,200,000.
Up to 5 years for this engine size.
The bank's rate
16.55% a year
KIBOR plus the bank's spread. KIBOR offer rates on October 30, 2026 (SBP).
Insurance a year, as % of the car's value
Banks require comprehensive insurance (takaful for Islamic finance) for the loan period. Get a quote for your car.
WINDOW STICKER
ABOUT EVERY MONTH IN YEAR ONE
Rs 77,245
Rs 68,912 instalment + Rs 8,333 insurance
- Car price
- Rs 4,000,000
- Pay now (30% down)
- Rs 1,200,000
- Bank loan
- Rs 2,800,000
- For
- 5 years at 16.55%
Financing costs Rs 1,334,691 more
BANK-READY CHECK
This fits the State Bank's car finance rules
At least 30% down: met
You put 30% down.
At most 5 years for cars up to 1,000cc: met
You asked for 5 years.
Bank loans up to Rs 3,000,000 in all: met
This loan is Rs 2,800,000, across every bank you borrow from for cars.
Take-home pay of about Rs 172,279 a month
Banks cap all your loan instalments at 40% of take-home pay, so this instalment alone needs that much. Other loans raise it.
MORE DOWN, LESS MARKUP
Each extra 10% down saves about Rs 190,670 of markup
Monthly figures include year-one insurance. Tap a row to use it.
- Principal repaid
- Markup paid
Each column is one year of instalments. Early payments are mostly markup; later ones are mostly principal.
Islamic car finance (ijarah or diminishing musharakah) follows the same arithmetic: the bank's profit is quoted as a yearly rate on the outstanding amount, and the monthly payment is a rental plus a share of ownership instead of a markup instalment. SBP rules also effectively rule out bank finance for imported cars. Compare with a personal loan in the loan calculator.
How the car financing calculator works
The bank finances the car price minus your down payment. The rate is KIBOR plus the bank's spread (the calculator starts from the 1-year offer rate and can switch to the 6-month one). The calculator turns that into a level monthly instalment over your chosen period, using the same formula as the loan calculator, then adds the yearly insurance premium (a percentage of the car's value, falling a little each year if you set a value decline) and any processing fee to give the total cost of ownership.
- L
- bank loan = car price x (1 - down payment %)
- i
- monthly rate = (KIBOR + spread) / 12
- n
- number of monthly instalments
A worked example
A Rs 4,000,000 car with a 30% down payment means a bank loan of Rs 2,800,000. At 16.55% a year (KIBOR 13.05% plus a 3.5% spread) over 5 years the instalment is Rs 68,912, and the bank earns Rs 1,334,691 in markup. With insurance at 2.5% a year, the five-year cost of owning the car on finance is Rs 5,834,691.
| Plan (Rs 4,000,000 car, 16.55%) | Instalment | Total markup | Cost of ownership |
|---|---|---|---|
| 30% down, 5 years | Rs 68,912 | Rs 1,334,691 | Rs 5,834,691 |
| 30% down, 3 years | Rs 99,202 | Rs 771,261 | Rs 5,071,261 |
| 50% down, 5 years | Rs 49,223 | Rs 953,351 | Rs 5,453,351 |
| 30% down, 5 years, KIBOR 1 point higher | Rs 70,418 | Rs 1,425,076 | Rs 5,925,076 |
The shorter loan has a higher instalment but costs Rs 563,430 less markup. A bigger down payment cuts the loan, the instalment and the markup together. And if KIBOR rises one point, a 5-year loan costs about Rs 90,386 more over its life.
SBP rules for car finance in Pakistan
The State Bank sets limits on bank car loans. These are the current rules we found. The calculator warns you if the down payment, the period or the size of this loan break them; the debt burden limit, the Rs 3 million cap across all your car loans and the imported-car rule are for you to check.
| Rule | Limit |
|---|---|
| Minimum down payment | 30% of the car's value |
| Maximum period, cars up to 1,000cc | 5 years |
| Maximum period, cars above 1,000cc | 3 years |
| Total auto finance per person, all banks combined | Rs 3,000,000 |
| Total monthly debt payments, consumer finance | Up to 40% of net income |
| Imported vehicles | Effectively not financed by banks |
These come from SBP circulars of September 2021 and May 2022, read on the SBP website; SBP has not changed them since (checked November 3, 2026). Banks can be stricter than the State Bank, and special schemes (such as products for Roshan Digital Account holders) can differ, so your bank's offer letter is final.
Conventional vs Islamic car financing
Conventional banks lend you the money and charge markup. Islamic banks usually offer ijarah (the bank owns the car and leases it to you, and you pay monthly rent) or diminishing musharakah (you and the bank co-own the car and you buy out the bank's share over time). The monthly payment is typically worked out the same way, with a profit or rental rate tied to KIBOR, so you can use this calculator with the rate your Islamic bank quotes and compare total payments. Note that Islamic structures can have different rules on late payments, insurance (takaful) and early settlement.
Tips before you sign
- Get the spread in writing. A single point of spread changes the instalment and the total markup noticeably (try 2.5% against 5% in the calculator).
- Ask about repricing. Find out how often KIBOR is reset on your loan and whether the instalment or the period changes.
- Budget for insurance every year. It is a real cost on top of the instalment, and the premium is renewed each year of the loan.
- Compare more than the headline rate. Processing fees, early settlement charges and the bank's valuation of the car all change the true cost. Run a personal loan comparison in the loan calculator to see the APR with fees.
- Keep a cash cushion. Registration and token tax are separate from the car price. A car purchase should not drain your emergency savings.
Sources and assumptions
KIBOR (October 30, 2026) and SBP auto finance rules (read on sbp.org.pk) checked November 3, 2026.
- State Bank of Pakistan, KIBOR rates, October 30, 2026 (data: Refinitiv)
- SBP BPRD Circular Letter No. 19 of 2022 (auto finance tenure: 5 years up to 1,000cc, 3 years above)
- SBP BPRD Circular Letter No. 29 of 2021 (30% minimum down payment, Rs 3 million aggregate cap, 40% debt burden ratio)
- Business Recorder, May 24, 2022: SBP reduces auto finance tenure
- Bank spreads and insurance rates are indicative figures from a 2026 bank comparison; your bank's offer letter governs
The SBP rules are read from both circulars on sbp.org.pk; SBP has issued no later amendment to them. Your bank can apply stricter limits. Results are estimates for information and planning only, not tax, legal or investment advice. Check your own case with a tax adviser, your broker or the official source before acting.
FAQ
Car Financing Calculator: common questions
What is the minimum down payment for a car loan in Pakistan?+
Under SBP's consumer financing rules, banks require at least 30% of the car's value as a down payment, so they can finance at most 70%. A larger down payment lowers the loan, the instalment and the total markup. Rules and bank policies can change, so confirm with your bank.
What is the maximum period for car financing?+
The SBP caps auto finance at 5 years for cars up to 1,000cc and 3 years for cars with larger engines. The calculator warns you when your chosen period is above the limit for the engine size you select.
Is there a limit on how much car finance I can take?+
Total auto finance for one person across all banks and DFIs is capped at Rs 3,000,000 at any point in time, according to SBP's 2021 revisions. With the 30% minimum down payment, that supports a car priced up to about Rs 4,285,714; a more expensive car needs a bigger down payment. Existing car loans count toward the cap.
How is the car loan rate decided?+
Banks price car finance as KIBOR plus a spread, commonly on the 6-month or the 1-year KIBOR (your offer letter says which). KIBOR (13.05% for 1 year and 12.66% for 6 months, offer rates on October 30, 2026) is set by the market and published by the SBP; the spread is the bank's margin, roughly 2.5% to 5% in bank comparisons this year and different for each bank and borrower. Because KIBOR changes, your rate and instalment can change when the bank reprices.
Is car insurance compulsory with a bank loan?+
Yes. The bank holds a charge on the car, so it requires comprehensive insurance (takaful in Islamic finance) for the whole loan period, and you pay the premium each year. Premiums are commonly around 1.5% to 3% of the car's value a year, falling as the car's insured value falls. The calculator includes it in the total cost of ownership.
Can I get bank finance for an imported car?+
SBP's 2021 changes effectively stopped bank finance for imported vehicles, so car loans apply to locally manufactured or assembled cars. Rules for specific products (for example Roshan Digital Account schemes) can differ, so ask the bank.
What is Islamic car financing and is it cheaper?+
Islamic banks offer ijarah (a lease where you pay rent and take ownership at the end) or diminishing musharakah (you buy the bank's share gradually). The monthly payment is built the same way as a conventional instalment, using a profit rate benchmarked to KIBOR, so cost is usually similar. Compare offers on total payments, not on the label.
Is it better to take a car loan or pay cash?+
Financing always costs more than cash because you pay markup. In the example below it adds about Rs 1,334,691 to a Rs 4,000,000 car over 5 years. A loan makes sense only if you need to keep your cash for something that earns more than the loan costs, or you cannot raise the full price. If you can, a larger down payment and a shorter period reduce the cost a lot.
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