LAHORE - Chairman Pakistan Industrial & Traders Association Front Tahir Javed Malik has said that car financing in Pakistan has remained low over the last few years, despite reduction in the interest rate. Recent statistics have shown that the option of car financing is only availed by 20-25% of consumers purchasing auto vehicles in Pakistan. The period of 2004-2007 had witnessed car financing figures peaking at 70-75% of vehicle purchases in Pakistan.

During last few years, the banking sector of Pakistan adopted stringent measures to counter high default rates. For this purpose, the process of seeking car financing became more cumbersome and expensive for the consumers of Pakistan. Despite the reduction in interest rate by the State Bank of Pakistan to boost consumer lending, banks maintained their cautious approach; presently car financing markup rates still amount to 14-18%. Additionally, only a handful of banks offer car financing facilities to their consumer base. The reduced competition also plays its part in keeping the sales volume low and markup costs high.