Car Financing Know The Basics
The practice of lending money has been in place since long as there used to be people who’d give their money in loans and take interest upon it. This practice has been carried on in the civilized world by financial institutions such as banks which have introduced financing and loan facility for a various number of services such as home financing or marriage loans. Just like these being huge expenses that most people cannot afford to pay in lump sum for, getting a car doesn’t seem easy as well because the prices of new vehicles have soared due to various taxes and duties being imposed by our government. Thus people resort to finance their cars to ease the burden and not having to shell out a huge chunk of their savings all at once. In Pakistan, the economic situation currently is not so strong that everyone can simply just go to the showroom and order a new car of their choice which is why a huge chunk of car sales in Pakistan is taken by car financing because surveys show that between July 2014-June 2015, 19.5% of the total car sales were done through car financing.. It’s also worth mentioning here that Pakistani banks offer conventional car financing as well as Islamic car financing to cater the varying demands of the public. There has been a upward trend in the number of cars that are financed by banks across Pakistan with Bank Alfalah, UBL, HBL and MCB taking the lead. With the fuel pricing also being at a favourable point currently, this trend will only go upwards even more. For those who don’t know about car finance, firstly in really easy words, it’s buying a car now and paying later in installments. What’s good about car finance is that you can choose a new, used or imported car and get it financed. Some banks also allow you to set a tenure upto a specific number of years for your ease to pay off the installments. Meanwhile the bank will pay the car owner/manufacturer a partial sum on your behalf and the rest would be paid by you as down payment. However the ownership of the car will remain with the bank until you’ve paid off all your installments and only then will be transferred to your name. Owing to strong growth of Islamic banking in Pakistan, banks have brought out Islamic car finance as well along with conventional car finance for catering both school of thoughts. Which we think is a good move because many people are now switching to Islamic financial solutions. Car finance, be it Islamic or conventional comes with a set of benefits. These range from having flexibility in setting up installment duration to choosing a new or used car of your choice. Some banks even offer you the choice to pay as much amount in down payment as you can. Not just that, you can also get a tracker and insurance on subsidized rates. This concludes an overview of Car Financing and what it brings to the table. We hope that our readers got an idea of what it is and what it offers.