Here is another latest update about automobile loan tenure. The State Bank of Pakistan has shortened the consumer finance duration for auto loans by almost half and announced a new deadline for automobile financing. As a result of this, borrowers will have to pay larger monthly installments. This is the government’s second important step in controlling inflation and the import bill.
Revised Prudential Regulation:
The State Bank of Pakistan has declared the revised prudential regulations for consumer financing. According to the new regulation, the maximum tenure of the auto finance facility has decreased. It decrease from five to three years for automobiles with engines larger than 1,000cc. The vehicles with an engine displacement under 1,000cc have had their tenure reduced from seven to five years.
State Bank of Pakistan Statement:
As per the circular, the central bank has decided that the new revisions will apply to all locally assembled automobiles. It includes finance for vehicles with engines under 1,000 cc and locally assembled or manufactured electric vehicles. The statement added, that new changes are effective immediately on new financing facilities. But the banks have not yet granted permission. This measure will serve to limit the economy’s demand growth, resulting in slower import growth and supporting the balance of payments.
The move of the central bank expands other limits on auto financing. It completes the overall belt-tightening and SBP boosted the interest rate by 150 basis points to 13.75 percent in a bid to curb increasing inflation.
However, the regulatory treatment of the “Roshan Apni Car product” that was previously disclosed to RDA participant banks would remain in force. Furthermore, the Roshan Apni Car initiative for foreign Pakistanis will remains unaffected.