Monthly installment on a Rs 50 lakh car (30% down)
| Markup | 1 year | 3 years | 5 years |
|---|---|---|---|
| 12% | Rs 310,971 | Rs 116,250 | Rs 77,856 |
| 15% | Rs 315,904 | Rs 121,329 | Rs 83,265 |
| 18% | Rs 320,880 | Rs 126,533 | Rs 88,877 |
How the installment is calculated
Installment = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of months.
Example: a Rs 50 lakh car with 30% down leaves a Rs 35 lakh loan. At 15% for 5 years, the installment is about Rs 83,265 a month, and you pay about Rs 1,495,885 in markup over the loan.
Ways to pay less
- A bigger down payment cuts both the installment and total markup.
- A shorter tenure raises the installment but saves a lot of markup.
- Compare the total cost across banks, including insurance and fees, not just the rate.
Frequently asked questions
How do banks calculate car loan installments in Pakistan?
Conventional and Islamic banks use a reducing-balance method: each month part of your installment pays markup on the remaining balance and the rest reduces the loan. The installment stays the same for a fixed rate. For variable rates linked to KIBOR, it is reset (usually yearly) when KIBOR changes.
What is the minimum down payment?
State Bank of Pakistan rules set a minimum down payment and a maximum loan amount and tenure for auto finance, and banks may ask for more. Check the current SBP limits and your bank's offer before you apply.
What markup rate should I enter?
Most banks quote KIBOR plus a spread, for example 1-year KIBOR + 2.5% to 4%. Ask your bank for the effective annual rate and enter it here.
Is insurance included?
No. Banks also require yearly comprehensive insurance (or takaful), often 1.5% to 3% of the car value, plus processing fees. Add these to the total cost.
Is Islamic car financing cheaper?
Not necessarily. Ijarah and diminishing musharakah are priced using similar benchmarks, so compare the total amount you will pay, not just the label.
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Sources
- State Bank of Pakistan Prudential Regulations for Consumer Financing (auto finance)
- Standard reducing-balance (EMI) formula
This calculator gives an estimate for guidance. It is not official advice. Rates and rules change, so confirm important decisions with the relevant authority or a qualified professional. See how we calculate, or report a mistake.