Example: a Rs 40 lakh car, two offers
These are made-up example offers, not any bank’s quote. Both ask for 30% down, leaving a Rs 2,800,000 loan, inside the SBP Rs 3 million cap. Insurance is 2.5% of the price a year in both.
| Item | Offer A | Offer B |
|---|---|---|
| Rate and tenure | 15%, 5 years | 14%, 3 years |
| Monthly installment | Rs 66,612 | Rs 95,697 |
| Total markup | Rs 1,196,708 | Rs 645,105 |
| Insurance and fees | Rs 517,500 | Rs 320,000 |
| Total cost | Rs 5,714,208 | Rs 4,965,105 |
Offer A’s installment is Rs 29,086 lower, but two extra years of markup and insurance make it Rs 749,103 dearer in total.
How the offers are compared
- Installment on the loan left after the down payment, using the reducing-balance formula, the same as the car loan calculator.
- Total markup = installment × months − loan.
- Insurance = price × yearly % × years. In practice the premium is charged on the car’s falling value, so this is a little high, but it is applied the same way to every offer.
- Total cost = down payment + loan + markup + insurance + fees: everything you pay over the term.
For a house, see the full year-by-year schedule in the home loan calculator.
Frequently asked questions
What is KIBOR and why does my rate depend on it?
KIBOR (Karachi Interbank Offered Rate) is the benchmark rate published every working day by the State Bank of Pakistan. Most car and home financing is priced as KIBOR plus a spread, for example 1-year KIBOR + 2% to 5% depending on your risk profile. On 4 September 2026 the 1-year KIBOR offer rate was 12.19%, so a 2.5% spread meant roughly 14.7% a year. Compare offers on the all-in rate, and check which KIBOR tenor (6-month or 1-year) each bank uses.
Should I choose a fixed or variable rate?
A fixed rate keeps the installment the same for the whole term. A variable (floating) rate is reset, usually once a year, to the then-current KIBOR plus the same spread, so the installment rises or falls with interest rates. Fixed rates often start a little higher. This calculator assumes each rate stays as entered for the whole term, so for a variable offer try a higher and a lower rate to see the range.
What insurance do banks require?
Banks make yearly comprehensive car insurance (or takaful) compulsory, usually through an insurer on their panel, and many also require life or takaful cover on the loan. Premiums differ between insurers and by car, so ask each bank for its insurance quote and enter it as a % of the price a year. If life cover is charged as a lump sum, add it to other fees. For a house, enter your property and life cover cost, or 0.
Can I pay the loan off early, and what does it cost?
Yes, but most banks charge for early settlement or part-payment, set in their Key Fact Statement. For example, JS Bank’s CarAamad KFS (June 2026) charges 7.5% of the principal for full prepayment in the first two years and does not allow part-payment in the first year, while Bank Alfalah’s Islamic auto finance KFS charges 6% of the outstanding amount. If you may settle early, include these charges when you compare offers.
Is a longer tenure better because the installment is lower?
Only if you need the lower installment to manage your budget. Spreading the same loan over more months means markup is charged on the balance for longer, and insurance is paid for more years, so the total cost rises. In the example below, the 5-year offer has an installment about Rs 30,000 lower but costs about Rs 7.5 lakh more in total than the 3-year offer.
Related calculators
- Car loan calculatorWork out the monthly installment, total markup and full cost of car financing in Pakistan from price, down payment, rate and tenure.
- Home loan calculatorWork out the monthly installment, total markup and full cost of a home loan in Pakistan from property price, down payment, rate and tenure.
- Bank profit calculatorWork out the monthly, quarterly or half-yearly profit on a bank savings account after 20% (filer) or 40% (non-filer) withholding tax.
- Committee (BC) calculatorPlan a committee: total payout, month-by-month schedule and what your turn means for you, for any number of members.
Sources
- SBP BPRD Circular Letter No. 29 of 2021: 30% minimum down payment, Rs 3 million cap on auto finance per person, 5-year tenure
- SBP (May 2022): auto finance tenure cut to 3 years for vehicles above 1,000cc
- SBP KIBOR rates, 4 September 2026 (1-year offer 12.19%)
- JS Bank CarAamad Auto Finance Key Fact Statement, June 2026 (processing fee, prepayment charges)
- Bank Alfalah Key Fact Statements: Islamic Auto Finance, July 2025 (early payment charge)
- Bank of Khyber Foree Car: 1-year KIBOR + 2% to 5%, 30% down, 12 to 60 months, compulsory life and vehicle insurance
- Standard reducing-balance (EMI) formula
This calculator gives an estimate for guidance. It is not official advice. Rates and rules change, so confirm important decisions with the relevant authority or a qualified professional. See how we calculate, or report a mistake.