Auto-Loans in Pakistan Increased by Rs. 41 Billion in December 2020

Following a decrease in the interest rates and the rejuvenation of business activities after the initial pandemic-induced lockdowns, auto loans reportedly increased by 19 percent, amounting to Rs. 41 billion in December 2020.

As per the figures compiled by the Central Bank, the car loans of December 2019 had been recorded as Rs. 219 billion, and increased to Rs. 256 billion during the same time period in 2020. A media report suggests that the key driver of the increase had been the growing demand for 1300 cc passenger vehicles.


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Although no names were quoted by the media outlet, the report indicates that the high demand for the newly launched Toyota Yaris was majorly responsible for the increase in the loans. This is a fair assumption as, for the past several months, the Yaris alone has outsold both the Honda City and Civic combined.

The other key driver of the increase in the loans is the lowered interest rate. The State Bank of Pakistan had reduced the interest rates by 625 basis points to 7 percent in 2020. Additionally, a decrease in the rates of the soft interests meant lesser installments for car financing programs.


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A few fair price hikes by the automakers in 2020 seemingly had no impact on the rising demand for cars. In fact, with new players still entering the market before the expiration of the Auto Development Policy (ADP) 2016-21, it is safe to say that the demand for cars is likely to surge even more.

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