What is Car Financing, and How It Works

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Islamic Bank Car Loan

Cars have become a modern, swift and reliable source of transportation. Gone are the days when people used to carry their luggage and walk miles to reach their destination. Now it’s a modern world, every single field of life has progressed. Transportation which was a hassle in the ancient ages now has been resolved.
Cars have resolved it. Some People buy cars genuinely for their transportation and to get ease in their life but some only buy them to maintain their status in society, mainly just to show off. There is also a class who are not able to buy expensive cars due to their low incomes and poverty.
But now banks launched a such program (car financing) for people who can’t buy a car without financial support. They think this is an ideal way to empower people to buy cars. Let’s find out.

What is car financing?

Car financing is a term that refers to the buying of a car under an agreement between you and the lender with certain conditions which include you have to pay the amount of the car along with interest on it, in a predetermined period and interest rate.

What is Islamic auto financing?

Islamic Bank Car Loan is a type of financing which is widely offered by the majority of banks is a rental agreement under which the car is given to the consumer on rent for a certain period of time decided at the time of the contract. The customer has to make an initial deposit known as (a security deposit). This contract is generally made under the shariah act.

Banks that offer Islamic bank car loans:

These banks are widely offering their car financing service in Pakistan.

  • HBL Bank Ltd.
  • Ubl Bank Ltd.
  • Bank Islami Ltd.
  • Meezan Bank Ltd.
  • Alfalah Bank Ltd.
  • Allied Bank Ltd
  • Bank of Punjab (launched Bank of Punjab Car Loan scheme).
  • Dubai Islamic Bank.
  • Soneri Bank Ltd.
  • Standard Chartered Bank Ltd.
  • Askari Bank Ltd.
  • MCB Bank Ltd.
  • Faysal Bank Limited.

There are some other banks which are offering their car service in the market.

Islamic Bank Car Loan

What type of cars falls under car financing?

You can get a car of your own choice. Banks generally encourage their customers to go for brand-new cars rather than used cars because those cars are new and there is no such risk of wear and tear.

  • Brand new cars.
  • Used cars.

Criteria for car financing:

There is a criteria for getting a car through a car financing service in Pakistan:

  • You should have a nationality of Pakistan.
  • Your minimum required age is 21 and your maximum 60
  • You are in the list of permanent staff in a company.
  • Your monthly salary should be more than 30k.
  • Your employment length should be more than 3 years.

All the banks have different policies but these are points on which they have consensus.

Features you get when applying for car finance:

These are the features that entertain the customer when he applies for car finance.

  • No additional costs.
  • Financing option up to 6 million Pkr.
  • Easy and quick documentation.
  • Online applying facility.
  • No deduction of the processing fee if your application is rejected for a car loan.
  • Quick and effortless processing time.
  • Flexibility to decide the repayment period up to 6 years.

Documents you need to apply for a car loan:

These documents you need when applying for a Bank of Punjab Car Loan

  • Previous 6 months’ bank statement.
  • Photocopies of your id card.
  • 3 passport-size pictures.
  • Previous salary slips of 2 months.

How to qualify for car financing?

There are certain things that you need to take into account in order to qualify for a car loan.

  • Make you solvent in all financial dealings.
  • You should have a reliable source of income
  • Ready to prove your identity and residence at the time of processing,
  • If you got rejected then be positive and reapply.
  • You should have a down payment.
  • Try to get to know how car financing dealer deals.
  • Be good at your credit before applying.

(because banks do prefer customers with good credit.)

 

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