Consumer Auto Financing Tenure For Vehicles Reduced

Web Desk — Due to the country’s bulging import bill, the State Bank of Pakistan (SBP) reduced on Tuesday the consumer financing tenure for vehicles, bringing it down to a maximum of three years for cars with engine displacement of over 1,000cc, and to five years for those under 1,000cc.

“The maximum tenure of auto finance facility is reduced from five (5) years to three (3) years for vehicles above 1,000 cc engine displacement and from seven (7) years to five (5) years for vehicles up to 1,000 cc engine displacement,” the SBP circular read.

According to the central bank’s circular the amendments will be applicable to financing for all locally assembled/manufactured vehicles, including financing for vehicles of up to 1,000 cc engine displacement and locally assembled/manufactured electric vehicles.

“However, the regulatory treatment of Roshan Apni Car product communicated earlier to RDA participant banks will continue to remain effective,” read the circular.

SBP said that the amendments in PRCF will be applicable, with immediate effect, on new financing facilities where the Banks/DFIs have not granted the approval yet. However, all other instructions on the subject shall remain unchanged.

The central bank’s latest measure comes a day after the Monetary Policy Committee (MPC) raised the key interest rate by 150 basis points, taking it to 13.75%, the highest interest-rate level since 2011 when it stood at 14%.