Auto financing in Pakistan continued its strong run. It grew for the 11th straight month and reached Rs. 315.4 billion by the end of October 2025. The figure rose from Rs. 305 billion recorded in September. The new numbers showed clear momentum in the sector.

Year-on-year growth came in strong. Auto financing jumped 33.7% from Rs. 236 billion in October 2024. Month-on-month growth stood at 3.5%. The pace remained steady.

Analysts linked this rise to the lower interest rate cycle. The State Bank of Pakistan dropped its policy rate to 11% in June 2024. It had remained at 22% earlier in the year. The rate cut revived demand for car loans. Borrowers returned to the market as financing became cheaper. The current demand is moving toward the previous peak of Rs. 368 billion set in June 2023.

Demand for small and affordable cars stayed strong. Consumers showed higher interest in the Suzuki Alto 660cc. Buyers also turned to imported second-hand vehicles. New model launches by new entrants and established assemblers added to the excitement.

Banks and car makers supported demand with attractive financing offers. They introduced packages with interest rates below 10%. These deals pushed loan growth further.

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However, some hurdles slowed expansion. The Rs. 3 million cap on auto loans remained restrictive. A 30% down payment requirement also discouraged potential buyers. Shorter loan tenures, five years for cars up to 1,000cc and three years for smaller units, added more pressure. These rules limited high-end car financing.

Analysts expect the trend to continue. Stable or lower interest rates could keep demand high. Growth in small and affordable vehicle segments will likely drive the market in the coming months.