Pakistan’s auto financing sector continues to show resilience amid economic challenges, with total car loans reaching Rs257.36 billion by the end of March 2025, according to the latest figures released by the State Bank of Pakistan (SBP).
This marks a 3.43% month-on-month (MoM) increase from Rs248.82 billion in February and a 7.49% year-on-year (YoY) growth from Rs239.44 billion in March 2024.
The uptick in vehicle financing comes despite persistent macroeconomic headwinds, including elevated interest rates, surging vehicle prices, tighter loan approval regulations, and higher import taxes on cars and components.
Auto Financing trends
Auto financing began recovering in August 2024, when the figure stood at Rs227.3 billion, and has since followed an upward trajectory. While current figures remain below the sector’s historical peak of Rs368 billion in June 2022, the steady MoM and YoY gains reflect renewed consumer interest, particularly in bank leasing and vehicle loans.
Amid inflationary pressure and rising costs of ownership, bank leasing has become a preferred option for both salaried individuals and small business owners, enabling them to manage costs through monthly payments on both new and used vehicles.
Consumer Financing crosses Rs873 billion mark
The broader consumer credit landscape also registered growth, with total consumer financing reaching Rs873.75 billion in March 2025—an 8.25% YoY increase. On a monthly basis, this marked a 0.74% rise from February’s Rs867.35 billion.
Personal Loans Surge – Personal loans stood out with a notable expansion, hitting Rs267.67 billion in March—up 10.59% YoY and 0.48% MoM. This continued demand indicates growing reliance on credit to meet household and personal spending needs.
Housing Finance Sees Marginal Dip – In contrast, housing finance contracted, recording a 3.08% YoY decrease to Rs199.43 billion. Month-on-month, housing loans slipped 0.11%, down from Rs199.65 billion in February. The decline reflects the impact of high borrowing costs and a cooldown in real estate activity, often linked to ongoing macroeconomic adjustments.
Private sector credit hits Rs9.44 Trillion
The SBP data also reveals that outstanding credit to the private sector surged 12.34% YoY, totaling Rs9.44 trillion in March 2025. This figure represents a 1.49% MoM increase from Rs9.3 trillion recorded in February.
Within the private sector, the manufacturing industry accounted for Rs5.41 trillion in loans—up 11.92% YoY and 1.17% MoM. The sector remains the top recipient of credit, reflecting its pivotal role in Pakistan’s industrial output and export generation.
Borrowing by the construction sector stood at Rs212.76 billion, showing 9.43% YoY and 1.04% MoM growth. Meanwhile, credit extended to the agriculture, forestry, and fishing sectors reached Rs445.05 billion, registering a 13.49% YoY and 2.02% MoM increase—suggesting strong seasonal demand and government-backed agricultural financing initiatives.
Economic outlook: Gradual return to lending confidence
The recovery in auto and consumer credit signals a cautiously optimistic outlook for Pakistan’s financial and retail sectors. Despite prevailing economic constraints, the growth in consumer and private sector lending underscores renewed banking sector activity and gradual restoration of consumer confidence.
Should these trends continue, they could pave the way for a broader recovery in vehicle sales, housing markets, and industrial activity—all of which are vital for sustained economic growth in the coming quarters.