Pakistan plans major car financing overhaul under new auto policy

The federal government is reviewing a major set of car financing reforms aimed at making vehicles more affordable and reviving demand in the auto sector under the draft Auto Industry Development & Export Policy (AIDEP) 2026–31.

According to sources, the proposals are currently under consultation with the State Bank of Pakistan and industry stakeholders and include a financing cap of up to PKR 10 million for locally manufactured vehicles.

One of the key reforms under consideration is extending auto financing tenure up to seven years, allowing buyers to repay loans over a longer period with smaller monthly installments.

The draft policy also proposes reducing the minimum down payment requirement to 15 percent, which would significantly lower the upfront cost for buyers.

Officials say these measures are designed to restore consumer purchasing power after years of high interest rates, rising car prices and strict lending conditions that led to a slowdown in vehicle sales.

Also Read: Islamabad introduces lighter school bag rule for private schools

The framework also includes regulated liberalization of used car imports with inspection requirements, depreciation limits and gradual tariff reductions by FY2030.

For consumer protection, the policy proposes fixed booking prices, penalties for delayed deliveries and caps on advance payments and spare parts margins.

Industry experts believe easier financing could boost Pakistan’s struggling auto market, support local manufacturing and stimulate economic activity across vendor industries.

The draft policy also outlines long-term targets including higher vehicle production, increased exports, expansion of electric vehicle infrastructure and reduced tariffs on automobiles over the next several years.