How We Calculate

The installment formula

Every calculator on CarLoanCalculator.pk uses the equal-installment, reducing-balance method that Pakistani banks use for car finance. The monthly installment is:

Installment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

Here P is the amount the bank finances (the car price minus your down payment), r is the annual rate divided by 12, and n is the number of months. Each month, markup is charged on the balance still outstanding, and the rest of the installment reduces that balance. This is why the repayment schedule on our calculators shows markup falling and principal rising month by month.

Worked example

Take a financed amount of PKR 2,100,000 over 5 years (60 months) at 14.39% a year, which is today's 1-Year KIBOR of 10.89% plus a 3.5% spread. The monthly rate is 1.1992%, and the formula gives an installment of PKR 49,289. In the first month, PKR 25,183 of that is markup and PKR 24,106 goes towards the principal. Over the full term you pay PKR 2,957,338, of which PKR 857,338 is markup.

Where the rates come from

Most car finance in Pakistan is priced as 1-Year KIBOR plus a bank spread. We take KIBOR from the State Bank of Pakistan's published rates and each bank's spread or fixed rate from its own product pages, key fact statements and schedule of charges. Where a bank publishes a range, we use the middle or the most common figure and say so on the bank's page. Where a bank does not publish a rate at all, we use an indicative rate in line with similar banks and label it with a "~".

Current figures: 1-Year KIBOR 10.89%, SBP policy rate 12.00%, last reviewed November 2026. Car prices in the installment plan tables are the makers' listed ex-factory prices, checked on 4 November 2026.

SBP limits we apply

The State Bank of Pakistan's prudential regulations for consumer financing set limits that every bank must follow, and our calculators apply them automatically so the numbers you see are ones a bank could actually approve:

• Minimum down payment of 30% of the vehicle price.
• Total auto financing per person across all banks capped at PKR 3,000,000. On more expensive cars the down payment rises to cover the difference.
• Maximum tenure of 5 years for vehicles up to 1000cc and 3 years above 1000cc.
• All loan installments together kept within about 40% of net monthly income (the debt burden ratio).

These limits were tightened in 2021 and 2022. A new auto policy has been discussed that could relax them; if SBP changes the rules, we update the calculators and note the change here.

What the estimates leave out

Our results cover the finance cost only. They do not include insurance or takaful, tracker charges, the bank's processing fee, registration, token tax or withholding tax, because these depend on the car, the city and your tax status. Banks also price individual customers differently based on income, employer and credit history. Treat every figure as an estimate for planning and comparison, and rely on the bank's written offer before you commit.

Reviews and corrections

We review KIBOR and bank rates every month and car prices whenever makers announce changes. If you spot a rate that has changed or a calculation that looks wrong, please tell us through the contact page with a link to the bank's source, and we will check it and correct the page.