Auto financing in Pakistan rose to a record Rs382 billion in June 2026, showing a sharp recovery in bank-backed vehicle purchases. Data shared by Arif Habib Limited showed that outstanding auto loans increased 38% from Rs277 billion in June 2025.
The State Bank of Pakistan’s latest figures put the exact June balance at Rs381.69 billion. That marked a 3.4% monthly increase from Rs369.12 billion in May, which had already set a previous record. The June total was also 37.99% higher than the Rs276.61 billion recorded a year earlier.
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The figure represents the total unpaid value of vehicle loans held by banks at the end of June. It does not mean lenders issued Rs382 billion in fresh auto financing during the month.
The latest increase continues an upward trend that began after auto lending fell to around Rs225 billion in 2024. High interest rates, expensive vehicles and weaker household purchasing power had reduced demand during 2023 and 2024.
Lower interest rates support financing demand
Pakistan’s policy rate stood at 11.5% in June 2026 after the State Bank kept it unchanged at its June 15 meeting. The rate remains high for many households, but it sits far below the peak levels reached during the earlier monetary tightening cycle.
Lower borrowing costs have gradually made monthly instalments more manageable. Banks and automakers have also promoted fixed-rate plans, reduced-markup campaigns and shorter-tenure instalment offers for customers who cannot pay full vehicle prices upfront.
Some bank products still link auto financing rates to one-year KIBOR plus an added margin. This means instalments can remain sensitive to changes in market interest rates, especially under variable-rate plans.
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The improvement in financing has coincided with stronger vehicle demand. Pakistan Automotive Manufacturers Association data showed sales of cars, light commercial vehicles, vans and jeeps reached 206,436 units in fiscal year 2025-26, up 39.4% from 148,042 units a year earlier. June sales rose 28.8% from May and 4.4% year-on-year.
Consumer financing reaches Rs1.145 trillion
Total consumer financing rose to about Rs1.145 trillion in June, increasing 25.4% from a year earlier and 3.9% from May. Auto loans remained the largest segment, ahead of personal loans, housing finance and credit-card borrowing.
SBP data showed housing finance reached Rs267.09 billion in June, while personal loans stood at Rs282.89 billion. The wider consumer credit increase suggests households have started returning to formal borrowing as financial conditions improve.
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However, affordability remains a major concern. Vehicle prices, insurance charges, fuel costs and large monthly instalments still limit access for many buyers.
The record auto-loan balance therefore signals a strong recovery, but not necessarily broad affordability. Future growth will depend on interest rates, vehicle prices, household incomes and the availability of competitive financing plans.
