Installment, total cost and markup on auto finance.
Monthly installment
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Amount financed
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Total markup
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Total cost
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Your breakdown
Updates live as you type
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Amount (PKR)
Worked example
Say a vehicle costs Rs 5,000,000 and you put down Rs 1,500,000, so the bank finances Rs 3,500,000.
Over a 5 year tenure at a 20% annual markup, the monthly rate is 20% divided by 12, and there are
60 monthly installments. Plugging the financed amount into the level installment formula gives a
payment of about Rs 92,729 a month. Across all 60 months you repay roughly Rs 5,563,716, so the
total markup is about Rs 2,063,716 on top of the Rs 3,500,000 borrowed. Add back your Rs 1,500,000
down payment and the total cash cost of the car is about Rs 7,063,716. A larger down payment would
shrink both the installment and the markup, because there is less principal earning markup each month.
How it is calculated
The tool first works out the amount financed, which is the vehicle price minus your down payment.
It then converts the annual markup rate to a monthly rate by dividing by twelve, and counts the
tenure in months. The level monthly installment comes from the standard amortization formula, where
the payment equals the financed amount times the monthly rate, divided by one minus one plus the
monthly rate raised to the negative number of months. Multiplying that installment by the number of
months gives the total of all payments, and subtracting the amount financed leaves the total markup.
The total cost adds your down payment to every installment you pay. Because markup is charged on the
reducing balance, a shorter tenure or a bigger down payment both lower the markup you hand over.
Frequently asked questions
How is car finance calculated in Pakistan?
The bank finances the vehicle price less your down payment, then charges a level monthly installment over the tenure at the agreed markup rate. A larger down payment lowers both the installment and the total markup. The total cost is your down payment plus all the installments you pay.
What is the minimum down payment required for car finance in Pakistan?
Most Pakistani banks and leasing companies require a minimum down payment of 20 to 30 percent of the vehicle price. Some banks offer higher financing ratios for salaried customers with a strong credit history, while others may require up to 50 percent for self-employed applicants. Always confirm the exact requirement with your lender before applying.
Which banks offer the best car finance rates in Pakistan?
Major banks including HBL, MCB, Bank Alfalah, Meezan Bank, and Allied Bank all offer auto finance products. Islamic banks such as Meezan use a Diminishing Musharakah or Ijarah structure instead of a conventional markup, so the underlying contract differs even when the monthly payment looks similar. Comparing the total cost of financing, not just the monthly installment, gives you the most accurate picture.
How does tenure length affect the total markup I pay?
A longer tenure reduces your monthly installment but increases the total markup you pay over the life of the loan, because the outstanding principal earns markup for more months. A five-year loan on the same amount at the same rate will cost significantly more in total markup than a three-year loan. Use this calculator to compare the total cost across different tenure options before committing.