Auto financing in Pakistan reached an impressive Rs 276.6 billion in June 2025, showing that people are still keen to own cars despite economic challenges. However, experts warn that rising car prices in Pakistan, higher interest rates, and inflation could slow down future growth in the sector.
Why Auto Financing Is Growing
Many people in Pakistan rely on auto loans to buy vehicles because it’s difficult to pay the full price upfront. Banks and leasing companies offer easy installment plans, making it more affordable for middle-class families to own a car.
In recent months, several factors have supported auto financing growth:
- Lower down payments and flexible plans introduced by some banks.
- Increased demand for personal vehicles due to limited public transport options.
- Rising fuel prices, which encouraged some buyers to consider more fuel-efficient cars.
Rising Car Prices
Despite the growth, the sharp increase in car prices is creating a big hurdle. Local car manufacturers have raised prices multiple times this year due to:
- Higher costs of imported parts.
- Currency depreciation.
- Increased taxes and duties on vehicles.
This means that even with financing options, many buyers are finding it harder to afford a new car.
Possible Slowdown in the Coming Months
Market analysts believe that if car prices continue to rise, auto financing growth will slow down in the coming months. People might delay buying cars or shift toward cheaper used vehicles. On top of that, if banks increase interest rates further, monthly installments will become more expensive, discouraging new buyers.
What Could Help the Market?
To keep the market stable, experts suggest:
- Encouraging local manufacturing to reduce dependence on costly imports.
- Offering tax relief or incentives on small and fuel-efficient cars.
- Promoting electric and hybrid vehicles, which may become more affordable in the long run.
Looking Ahead
For now, the auto financing industry is still showing strength, but the combination of high prices, inflation, and uncertain economic conditions could affect future demand. Buyers are becoming more cautious, and the industry may need to adapt by offering better deals, cheaper models, or government-backed incentives to sustain growth.
