How to use the car loan calculator
- Enter the car price (the on-road price the bank finances against).
- Enter your down payment as a percentage. The State Bank's minimum is 30%.
- Choose the engine size, then the tenure in years: up to 5 years for 1000cc and below, up to 3 years above 1000cc.
- Enter KIBOR and the bank's spread. Your bank's offer letter says which KIBOR (usually 1-year) and what spread it uses.
- Enter yearly insurance as a % of the car price and the processing fee.
How the instalment is calculated
Banks in Pakistan charge markup on the reducing balance, so each instalment pays the month's markup first and the rest reduces what you owe. Islamic banks use ijarah instead, a lease where you pay rent for the car and it becomes yours at the end. The rent is usually worked out from KIBOR in the same way, so the monthly figure is similar.
Worked example
The defaults are a Rs 4,000,000 car up to 1000cc, 30% down, 5 years, KIBOR 13.05% + spread 3% = 16.05%, insurance 2% a year and a Rs 10,000 fee.
- Down payment: 30% × Rs 4,000,000 = Rs 1,200,000
- Loan: Rs 4,000,000 − Rs 1,200,000 = Rs 2,800,000
- Monthly rate: 16.05% ÷ 12 = 1.3375%, over 60 months
- Instalment: Rs 2,800,000 × 0.013375 ÷ (1 − 1.013375^−60) = Rs 68,165
- Total markup: Rs 68,164.97 × 60 − Rs 2,800,000 = Rs 1,289,898
- Insurance: 2% × Rs 4,000,000 = Rs 80,000 a year, Rs 400,000 over 5 years
- Total cost: 1,200,000 + 4,089,898 + 400,000 + 10,000 = Rs 5,699,898
The 13.05% is the SBP's 1-year KIBOR offer rate on 30 October 2026. KIBOR moves with the policy rate, so check the latest figure before you apply.
SBP rules for car financing
| Rule | Limit |
|---|---|
| Minimum down payment | 30% of the vehicle's price |
| Maximum tenure, up to 1000cc | 5 years |
| Maximum tenure, above 1000cc | 3 years |
| Total auto finance per person, all banks | Rs 3,000,000 |
| Loan instalments, all loans together | Up to 40% of your monthly income |
| Imported cars, new or used | Not financed by banks |
Source: State Bank of Pakistan prudential regulations for consumer financing, BPRD Circular Letter 29 of 2021 and 19 of 2022. These were still in force in October 2026.
Why your instalment can change
Most car loans are variable: the rate is KIBOR plus a fixed spread, and KIBOR is reset once a year (sometimes every six months). If KIBOR rises by 1%, the default loan's instalment goes up from about Rs 68,165 to Rs 69,663. If it falls by 2%, it drops to about Rs 65,224. Some banks offer a fixed rate for the whole term, usually a little higher at the start.
Frequently asked questions
What is the minimum down payment for a car loan in Pakistan?
30% of the car's price, under the State Bank's rules. On a Rs 4,000,000 car that is Rs 1,200,000. Paying more lowers your instalment and the markup.
How long can a car loan be in Pakistan?
Up to 5 years for cars of 1000cc or less, and up to 3 years for cars above 1000cc. A shorter tenure means a higher instalment but much less markup in total.
What is the maximum car loan amount?
You can borrow at most Rs 3,000,000 in total from all banks for vehicles at any one time. For a car priced above about Rs 4.3 million you need more than the 30% minimum down payment to stay under this limit.
Is car insurance included in the instalment?
Usually not. Banks require comprehensive insurance (or takaful) for the whole loan period, and you either pay it once a year or the bank adds it to the instalment. Ask your bank, and compare quotes, because rates vary between insurers.
Related calculators
- Pakistan Home Loan Calculator — Monthly instalment, total markup and a yearly table for house financing in Pakistan, with KIBOR, takaful and SBP limits.
- Pakistan Salary Tax Calculator — Income tax on your salary for tax year 2026-27 under the Finance Act 2026, monthly and yearly, with take-home pay.
- Car Loan Calculator — Your real monthly car payment after down payment, trade-in and sales tax, and the cost of longer terms.
Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.