The Real On-Road Cost of a New Car in Pakistan (Beyond the Monthly Installment)

The price on a car maker’s website is the ex-factory price, and the monthly installment a bank quotes covers only the money it lends you. Neither tells you what the car will actually cost to get on the road and keep running. Buyers who plan around the installment alone are often surprised by a second bill on delivery day and a third one every year after. This guide lists every cost in the order you meet it, using a Suzuki Cultus VXR, listed at PKR 4,089,490, as the example.

1. The down payment

SBP rules require at least 30% of the price upfront, so on the Cultus that is about PKR 1,226,847. On cars above roughly PKR 4.3 million the down payment is larger, because banks cannot finance more than PKR 3 million per person. This is the biggest single cheque you will write, and the installment plan table shows the exact figure for each popular model.

2. Withholding tax at purchase

When a new car is registered, the Excise and Taxation department collects advance withholding tax on behalf of the Federal Board of Revenue. The amount depends on the engine size, and for bigger cars on the value, and it is considerably higher for people who are not on the FBR’s Active Taxpayers List. For a non-filer the tax can be several times the filer amount, which on a mid-size car runs into hundreds of thousands of rupees. If you are not a filer, registering as one before you buy is often the single biggest saving available. The dealer’s invoice or the Excise office will confirm the exact figure for your model.

3. Registration, number plates and token tax

Registration is handled by your provincial Excise and Taxation department. You pay a registration fee, which most provinces set as a percentage of the invoice value, the cost of number plates, and the first token tax. Token tax is a yearly charge based on engine size; some provinces, including Punjab, also let you pay it once for the life of the car. Under a conventional loan the car is registered in your name with the bank’s lien; under Ijarah it may be registered in the bank’s name, but you still bear these costs.

4. Bank charges

Banks charge a one-time processing fee, plus federal excise duty on that fee, and some add documentation or vehicle inspection charges. The amounts are published in each bank’s schedule of charges and usually run from a few thousand rupees to the low tens of thousands. They rarely appear in advertised rates, so ask for the full list before you sign. Our bank comparison links to each bank’s calculator page, where the main charges are noted.

5. Insurance or takaful

Every financed car must carry comprehensive insurance, or takaful for Islamic financing, for the whole term. Premiums typically fall between about 1.5% and 3% of the car’s value a year, depending on the model, the city and the insurer. On the Cultus that is roughly PKR 60,000 to PKR 120,000 in the first year, falling slightly as the car’s insured value goes down. Some banks collect it once a year and some add it to each installment.

6. Tracker

Banks require a tracking device approved by them. You pay an installation charge at the start and an annual or monthly subscription after that, commonly in the range of PKR 15,000 to PKR 25,000 a year all-in. Even after the loan ends, many owners keep the tracker because insurers often require it for cheaper premiums.

7. The monthly installment

Only now do we reach the number most people start with. Financing the rest of the Cultus over five years at around KIBOR plus 3.5% comes to roughly PKR 67,189 a month. Add the tracker subscription and a twelfth of the yearly insurance and the real monthly figure is several thousand rupees higher. The car lease calculator lets you add insurance and tracker costs so you see the all-in monthly amount.

8. Running costs

Fuel is the obvious one, but routine maintenance adds up too: oil and filter changes every few thousand kilometres, brake pads, tyres every few years, and the battery, which Pakistan’s summer heat shortens. Small wear parts are easy to overlook. Wiper blades, for example, harden quickly in the heat and dust and are best replaced each year before the monsoon. If you order replacements yourself, WiperSizeFinder lists the driver, passenger and rear blade sizes by make, model and year. It is built on US-market data, so it is most reliable for models also sold there, such as the Corolla, Civic and Corolla Cross; check the size printed on your old blade before ordering.

Buying abroad instead?

Many of our readers are overseas Pakistanis weighing a car at home against one bought where they live and work. Costs there are structured differently. In the United States, for instance, the sticker price is followed by state sales tax, title and registration fees that vary a lot from one state to another, and dealers add documentation fees on top. If you are comparing, VehicleTaxCalc estimates the tax and fees on a car purchase for each US state, which makes it easier to put both options side by side. For financing a car in Pakistan, though, the SBP limits on this site apply whoever the buyer is, including overseas Pakistanis financing through a local bank.

Putting it together

A sensible budget for a financed car covers the down payment and taxes on day one, the installment plus insurance and tracker every month, and running costs on top. Before you choose a model, run your salary through the eligibility calculator and leave room in your monthly budget for these extras. A car that only just fits on the installment alone is likely to strain you once the full cost arrives.