Understanding Auto Loans
Auto Loans has been introduced by banks to cater car financing of the potential clients. Due to collateralized loan, with relatively low risk, interest rates are comparatively lower. All about car loan:

Car Holder
Name of borrower is written as owner of the car accompanied by "On Account of" followed by bank's name
 

Eligibility Criteria
The understate are by and large conditions applied by different banks to evaluate the prospective customer

• Resident of Pakistan

• Minimum verifiable income of PKR 15,000/- usually verified by bank statement

• Six Months bank statement

• 21 years of age with CNIC (Computerized National Identity Card)

• Two references

• One landline number

Down Payment
Down payment of usually 10%-80% is required

Credit Limit
There is no upper cap in financing of vehicle but capacity to repay is considered based on monthly installments

Delivery Procedure
Once approved the banks makes Pay Order in favor of authorized dealers. Down payment also includes first installment, equity participation, and insurance premium for first year.

Payment Options
Payment can be made through cash at the branch counter of issuing banking, but it is usually discouraged by applying counter charges of PKR 100-200/-

Understanding Costs/hidden Charges
Charges pertaining to credit cars are broken down into four categories.

• Insurance Rate

• Interest Expense

Insurance Cover
To cover basic incidental/life loss risk associated with customers, bank by default has its credit protected by insurance companies. Premiums are being charged through customers in their bill

Interest Expense/Mark Up
Interest expense also known as mark up is applied on the who amount. Prevailing interest rates in Pakistan are around 14%-16% as risk with individual lending is relatively on the high side.

Major Industry Players

1. Citi Bank

2. RBS Bank

3. Allied Bank

4. Askari Bank

5. Standard Chartered

6. MCB Bank

7. Bank Al-Falah

8. United Bank Limited