Are you considering purchasing a new car but lack the financial means to do so? Automobile finance, on the other hand, is the greatest alternative for you, as it enables you to own the car while paying payments in instalments at your convenience! And we’ll assist you in locating the best vehicle financing in Pakistan.
Car financing is when you obtain financial assistance (loan) from a bank/company in order to purchase a car and then repay the loan according to the terms and circumstances. Because different banks have varying instalment schedules and interest rates, it is typically noticed that the longer you take to repay the loan, the more interest you will be charged. Now, this car finance is not limited to new vehicles; imported used vehicle financing is also increasing in popularity.
How automobile finance works
To summarise how vehicle finance works, below is a rundown of all the procedures involved:
1. Eligibility requirements
While the procedure for car financing varies each bank, the gist remains the same.
It needs you to first meet the qualifying conditions, which often requires you to be a Pakistani citizen between the ages of 22 and 65 with a stable source of income, whether through a job, other investments, or even your own business. Your income is essentially what helps them determine the monthly payment amount you will make. Though there are other other details to this, they vary each bank.
Following that, there are the documentations. This is a straightforward process in which you submit all pertinent documents to the bank for evaluation, including passport-sized photographs, copies of your national identification card, previous bank statements demonstrating your credibility in the past, and a letter or document from your employer defining your position and salary. This is a list of the basic documents that any bank requires, though additional documents may be necessary depending on your case/situation.
3. Bank processing
Here, it is entirely dependent on the banks’ cooperation, as your role has been completed. Bank representatives will verify and authenticate your information. They analyse the risk considerations for their bank based on your job/income stability. After that, if everything is in order, they book the automobile and begin the process of delivery and payment. Once this is completed, your instalment payment is computed based on your monthly income and the transaction is completed.
Now that you understand how vehicle finance works, let’s discuss its benefits and how to use them to obtain the best car finance in Pakistan. The first and most obvious benefit is that you are able to purchase a vehicle that you would not have been able to afford otherwise. This not only ensures that you have the greatest engine available on the market, but it also reduces the maintenance and repair costs that you would have incurred had you purchased an older vehicle within your budget. The second advantage is that you are not concerned with market price variations; once the bank determines the instalment amount, it is fixed regardless of how and when the market price of that car changes.
Which bank should you use to finance your car?
When we talk about repaying debts, we’re talking about a long-term commitment to a bank, and it’s not something you can back out of at any time. Though there are six guidelines, if followed, can assist you in selecting the best offers in Pakistan.
Certain banks offer a fixed rate, while others offer a variable rate that varies according to market value. It is preferable to choose a fixed rate, as you never know when and to what extent the market will rise or collapse, particularly in a developing country like Pakistan. Fixed rates provide a clear picture of how much you must pay, allowing you to budget for other expenses accordingly.
Certain banks, such as Bank Alfalah, include insurance coverage in their instalment programmes. This is advantageous since you not only obtain the automobile in instalments, but also obtain car insurance to cover its expenses in the event of an accident. This must be considered because it may play a significant role in your selection.
3. The bank’s contribution to the cost
Now, the average amount covered by any bank is approximately 85 percent. Though this may vary. Therefore, conduct thorough study and determine the maximum amount your wallet can bear.
4. Period of time
This is the time period during which you must return the debt. Again, evaluate this in light of your current income and stability.
5. Infancy of settlement
You can inquire with the bank about the terms and conditions of this loan, since it is conceivable that owing to changes in your income or savings, you will be able to repay the loan earlier than stated.
6. Additional possibilities
Balloon payments can be advantageous in some circumstances. Discuss this in detail with your bank manager prior to finalising the transaction.
These are the fundamental elements to consider while comparing banks. Keep your options open and conduct a thorough study on various banks prior to finalising.
To assist you in your quest, the following is a list of the finest banks for vehicle financing in Pakistan;
- Dubai Islamic bank – They offer the lowest insurance prices over a one- to seven-year period.
- Faysal bank limited – Recognized for its quick and hassle-free transaction processing
- Alfalah Bank — Known for its adaptability
- Askari bank – Provides financing for a large choice of used and new automobiles.
- Bank of Punjab – Recognized for its minimal documentation requirements and high degree of flexibility
Now that you’ve considered all of the points above and conducted thorough research on these few banks, you’ll be quickly guided to the greatest feasible car finance in Pakistan that fits your lifestyle.