Planning to get that new car but don’t have enough finance that you can invest on this luxury? Well, car financing is the best option for you, which allows you to own the car while making payments on installments at your ease! And we will help you find the best car finance in Pakistan.
Car financing is basically when you take financial help (loan) from a bank/company to own a car and then pay off that amount as per the terms and conditions. Different banks have different installment patterns and different interest rates, so usually a pattern is observed that the longer you take to pay off the loan, more the interest will be charged. Now this car financing is not only restricted to new cars, but the imported used car financing is also on a rise.
To give you a summary as to how car financing works, here is an overview of all the steps they follow;
- Eligibility criteria
The procedure for car financing differs from bank to bank but the gist however remains the same.It initially requires you to be up to the eligibility criteria, which usually states that you have to be a Pakistani citizen of around 22-65 years old with a fixed income, be it from a job, or your investments elsewhere or simply your own business. Your income is basically what helps them to decide how much you will pay monthly. Though there are many other details to this, but they differ from bank to bank.
After this comes the documentations. This is a simple process where you submit all your important documents to the bank for evaluation, like passport size photographs, copies of your national identity card, previous bank statements which prove your credibility in the past, and a letter or document from your office defining your position and salary. This is a list of basic documents that are required by any bank, though there may be an addition depending on your case/ situation.
Here, it’s solely on the banks working as your part is done now. The bank officials verify and authenticate your details. They weigh out the risk factors for their bank depending on your stability with job/income. After which if everything is clear, they book the car and work towards its delivery and payment procedures. Once all of this is done, your installment is calculated based on your monthly income and the deal is finalized.
Now that you are clear about the working of a car finance process, let’s talk about its benefits and how to utilize them in order to find the best car finance in Pakistan. The first and the most evident advantage is that you get to buy the latest car which otherwise you couldn’t afford. This not only makes you own the best engine there in the market but it also cuts down the maintenance and repair cost which you would’ve had to pay if you bought some old car in that budget of yours. The second advantage is that you don’t have to worry about the market price fluctuations, once the installment amount is decided by the bank, it is fixed no matter how and when the prices of that car change in the market.
Which bank to choose for your car finance?
It’s a long term commitment to a bank when we talk about paying off loans, and it’s not something that you can back off from at any given time. Though there are 6 points, if taken care of, can help you choose the best deals in Pakistan.
Here, some banks offer fixed and others offer a variable rate which varies as per the market value. It is better to opt for a fixed rate as especially in a developing country like Pakistan, you never know when and to what extent the market may rise or fall. Fixed rate gives you a clear vision as to how much you have to pay so that you can plan your other expenditures accordingly.
Some banks, like Bank Alfalah, offer insurance coverage as well in their installment plans. This is great because not only do you end up getting the car in installments, but you also get car insurance to cover its expenses should something happen to it. This must be taken into account because it can be an important part of your decision.
- The cost the bank is covering
Now the average amount that any bank cover sis about 85%. Though this might differ. So research well and calculate how much your pocket can bear.
This is the time span that you have in which you have to repay the amount. Again, analyze this having your current income and stability in mind.
- Early settlement
You can ask the bank about the terms and conditions they have on this, as it may be possible that due to your change in income or savings, you are able to repay the loan earlier than that documented.
- Other options
Balloon payments are useful if the conditions are favorable. Talk to your bank manager in detail about this before confirming the deal.
To make your research easier, here is a list of best bank for car finance in Pakistan;
Dubai Islamic bank – They provide the lowest insurance rates over the tenure of 1-7 years.
Faysal bank limited – Known for its fastest hassle free processing
Askari bank – Finances a wide variety of used and new cars
Bank of Punjab – Known for its minimum documentation and great flexibility