Introduction
Buying a car often requires financing, and Askari Bank provides a structured car financing solution. Whether you are purchasing a new or used vehicle, understanding the financing terms, interest rates, and repayment plans is essential. In this article, I will break down Askari Bank’s car finance options in simple terms, helping you make an informed decision.
Table of Contents
Eligibility Criteria
To qualify for Askari Bank car financing, you must meet specific criteria. These include:
- Age: 21 to 65 years (at the time of loan maturity)
- Employment Type: Salaried or self-employed
- Minimum Income:
- Salaried individuals: PKR 40,000 per month
- Self-employed individuals: PKR 50,000 per month
- Employment Tenure:
- Salaried: Minimum one year (for permanent employees)
- Self-employed: Minimum two years in the same business
These conditions ensure that borrowers have the financial stability to repay the loan.
Loan Amount and Tenure
Askari Bank offers financing for both new and used vehicles. The amount and tenure vary based on the car type and borrower profile.
| Vehicle Type | Minimum Loan (PKR) | Maximum Loan (PKR) | Tenure (Years) |
|---|---|---|---|
| New Car | 200,000 | 6,000,000 | 1 – 7 |
| Used Car | 200,000 | 3,000,000 | 1 – 5 |
The flexibility in tenure allows borrowers to choose a repayment plan that suits their financial condition.
Interest Rates and Markup
Interest rates depend on multiple factors, such as the car model, loan tenure, and applicant’s creditworthiness. As of now, Askari Bank follows a variable interest rate model linked to the KIBOR (Karachi Interbank Offered Rate).
| Loan Tenure | Interest Rate (KIBOR + Bank Margin) |
|---|---|
| 1 – 3 Years | KIBOR + 3.0% |
| 4 – 5 Years | KIBOR + 3.5% |
| 6 – 7 Years | KIBOR + 4.0% |
To illustrate, if the current 6-month KIBOR is 14%, a 5-year car loan will have an interest rate of 17.5% (14% + 3.5%).
Example Calculation
Let’s assume you purchase a new car worth PKR 2,000,000 with a 30% down payment. The bank finances the remaining PKR 1,400,000 for a 5-year tenure at 17.5% interest.
- Monthly Installment Calculation (Using the EMI Formula): EMI=P×r×(1+r)n(1+r)n−1EMI = \frac{P \times r \times (1 + r)^n}{(1 + r)^n – 1} Where:
- P = 1,400,000 (Loan Amount)
- r = 17.5% / 12 = 0.01458 (Monthly Interest Rate)
- n = 60 (Months)
- Total Interest Paid Over 5 Years: TotalInterest=(EMI×n)−LoanAmountTotal Interest = (EMI \times n) – Loan Amount TotalInterest=(35,215×60)−1,400,000Total Interest = (35,215 \times 60) – 1,400,000 TotalInterest=2,112,900−1,400,000Total Interest = 2,112,900 – 1,400,000 TotalInterest=712,900PKRTotal Interest = 712,900 PKR
Thus, you repay PKR 2,112,900 over five years for a PKR 1,400,000 loan.
Down Payment and Insurance
- Down Payment: Minimum 20% of the car price (can be higher for used cars)
- Insurance: Comprehensive car insurance is mandatory, which adds to the cost
| Car Price (PKR) | Minimum Down Payment (PKR) | Financed Amount (PKR) |
|---|---|---|
| 2,000,000 | 400,000 | 1,600,000 |
| 3,000,000 | 600,000 | 2,400,000 |
Insurance premiums vary based on car type and coverage level. On average, the annual premium ranges from 2% to 3% of the car’s value.
Processing Fees and Other Charges
Askari Bank charges a processing fee based on the loan amount.
| Loan Amount (PKR) | Processing Fee (PKR) |
|---|---|
| Up to 2,000,000 | 8,000 |
| Above 2,000,000 | 12,000 |
Other charges include:
- Late payment penalty: PKR 1,500 or 2% of installment amount (whichever is higher)
- Early settlement fee: 5% of the remaining balance
Documentation Requirements
Applicants need to submit these documents:
- Salaried Individuals:
- CNIC copy
- Salary slips (last 3 months)
- Bank statement (last 6 months)
- Employer certificate
- Self-Employed Individuals:
- CNIC copy
- Business proof (registration, tax documents)
- Bank statement (last 12 months)
- Tax returns (last 2 years)
Comparison With Other Banks
| Bank | Interest Rate | Maximum Tenure | Processing Fee |
|---|---|---|---|
| Askari Bank | KIBOR + 3.0% to 4.0% | 7 Years | PKR 8,000 – 12,000 |
| HBL | KIBOR + 3.5% to 4.5% | 5 Years | PKR 10,000 |
| Meezan Bank | 14% Fixed | 7 Years | PKR 8,500 |
| UBL | KIBOR + 3.25% to 4.25% | 6 Years | PKR 9,000 |
Askari Bank offers competitive rates, but some banks provide fixed-rate financing, which may benefit those preferring predictability.
Conclusion
Askari Bank car finance is a structured and flexible option for individuals seeking vehicle ownership. With a variety of tenure choices, competitive interest rates, and transparent charges, it caters to different financial needs. However, considering all costs—including interest, insurance, and processing fees—is crucial before applying. Comparing with other banks can also help in making the best decision.
If you’re eligible and comfortable with the repayment terms, Askari Bank’s car finance can be a solid choice for your next vehicle purchase.
