Car Financing Calculator Pakistan
Work out your monthly car loan installment, total mark-up and total cost for bank car financing or Meezan car Ijarah at KIBOR-linked rates.
Pre-filled from Searchable Data: 1-year KIBOR + 3% spread 14.01 (14 Sept)
How this is calculated
The instalment uses the standard reducing-balance (amortising) formula:
instalment = P × r ÷ (1 − (1 + r)^−n)
where P is the amount financed, r the monthly rate (annual ÷ 12) and n the number of months. Each payment covers that month's mark-up on the remaining balance first; the rest reduces the principal, so early payments are mostly mark-up.
Islamic products (Ijarah / Diminishing Musharakah) are structured differently in contract but usually produce a comparable monthly figure at a comparable profit rate, so this calculator is a fair estimate for both.
Frequently asked questions
- What rate do banks charge for car loans?
- Most conventional car loans are priced at 1-year KIBOR plus a spread of 2–4%. Islamic banks quote a profit rate that tracks the same benchmark.
- Is a bigger down payment better?
- A larger down payment reduces both the instalment and total mark-up. Banks reward it with lower spreads too.
- Can I pay off early?
- Yes, most banks allow early settlement after a lock-in period (often 1 year) with a small penalty of 1–3% of the outstanding amount.
- Does this include insurance?
- No. Comprehensive insurance is mandatory during the loan and costs roughly 2–3.5% of the vehicle value per year.
Sources
- Standard amortisation formula; KIBOR reference from SBP: State Bank of Pakistan
Version 1.0.0 · reviewed 15 Sept 2026. Rates change with the Federal Budget and regulator notifications; we update this tool when they do. Confirm with the primary source before making financial decisions.