THE cut in the interest rate to 12 per cent from 22pc in June 2024 is reviving auto financing at a snail’s pace as either the monthly instalments are still unaffordable or the consumers are waiting for a further drop in instalments after a possible future interest rate cut.

For the last few months, banks and assemblers have been trying hard to lure buyers through promotional offers and lowering financing costs.

As the market is abuzz with reports of a further interest rate drop by 1pc in the next Monetary Policy Meeting of the State Bank in March, the resulting anxiety keeps buyers away from car leasing.

Bankers and auto sector stakeholders believe that people with handsome salaries in the corporate sector and big private firms are turning up for auto financing, while regular citizens still consider the interest rate too high for auto financing.

Banks charge 3-5pc more than the policy rate Karachi Interbank Offered Rate (Kibor) -Plus. A banker dealing in car leasing said if a buyer books a locally assembled Suzuki Alto VXL AGS 660cc, priced at Rs3.04 million, on a five-year instalment package by paying 30pc the of vehicle’s amount, the monthly instalment comes to Rs56,000-57,000 per month, including the monthly Takaful amount of Rs5,073 and Rs1,527 for tracker charges. The monthly instalment was Rs........

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