SBP toughens conditions for car loans
To slow the import growth, the State Bank of Pakistan (SBP) reduced the limit of loans on the imported cars and the returning time for consumers.
The 24News HD TV Channel reported on Friday that the SBP has revised Prudential Regulations (PRS) for Consumer Financing.
The changes in the PRs effectively prohibit financing for imported vehicles and tighten regulatory requirements for financing of domestically manufactured and assembled vehicles of more than 1000 cc engine capacity and other Consumer Finance facilities like personal loans and credit cards.
The SBP has reduced the maximum tenure of auto finance from seven years to five years and the maximum tenure of personal loans from five years to four years.
According to the SBP’s revised PRs, the maximum debt-burden ratio, allowed to a borrower, has been decreased from 50 to 40 per cent and overall auto financing limits availed by one person from all banks and DFIs, in aggregate, would not exceed Rs3 million at any point in time.
While minimum down payment for auto financing has been increased from 15 per cent to 30 per cent.
The new regulations were not applicable to locally manufactured or assembled vehicles of up to 1,000 cc engine capacity. They are also not applicable to locally manufactured electric vehicles to promote the use of clean energy. The financing of these two categories of vehicles will continue to be governed by the previous set of regulations.
Reporter: Ashraf Khan