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Auto Loan

How to Get Auto Loan From Islami Bank 2021

New car and used car can be purchased from Islamic Bank in monthly installments
All Pakistani men and women who have Pakistani nationality and are over 18 years of age can buy a car from Islamic Bank.
Businessman Salary Person Self-Employed People are Eligible. There are fatwas of three religious scholars from Islamic Bank who have said that Islamic Bank gives car installments without interest.

For the Purchase of Brand New Vehicles

the following criteria will have to be met for the bank to provide any assistance to the client.

The facility provided by the Bank for Brand New Vehicle

Lease of the Auto: 1 – 7 Years

Customer Fairness: Minimum 15% – Maximum 90%

Funding Amount: Minimum Rs. 250,000 Maximum Rs. 10,000,000/-

Processing Fee: Application Fee (Upfront) which is Rs. 1,200 per car

Credentials And Processing Charges:
1.  Funding Up to Rs. 1 million with Up to Rs. 6,300 per car
2.  Funding Up to Rs. 10 million with Rs. 6,300 per car
3. Funding above Rs.10 million but below 50 million with Rs.15,600 per car

Tracker Installation: Compulsory for all vehicles and the responsibility of BankIslami Pakistan

Takaful: Reaching from 1.85% – 2.8%

For the Purchase of Used or Re-conditioned Vehicles,

the following criteria will have to be met for the bank to provide any assistance to the client.

The facility provided by the Bank for Used or Re- conditioned Vehicles

Lease of the Auto: 1 – 7 years

Customer Equity:  Minimum 15% – Maximum 90%

Funding Amount: Minimum Rs. 250,000-Maximum Rs. 10,000,000

The Age of Use Vehicle (Manufacturing Year): Should be around 9 years old from the manufacturing date and not older than 12 years.

Processing fee: Application Fees (Upfront) which isRs. 1,200 per car


Documentation and Processing Charges:
1. Funding Up to Rs. 1 million with Rs. 6,300 per car.
2. Funding Up to Rs. 10 million with Rs. 6,300 per car.
3. Funding above Rs.10 million and below 50 million with up to Rs.15,600 per car.

Tracker Installation: Compulsory for all vehicles and the responsibility of BankIslami Pakistan.

Takaful: Reaching from 1.85% to 2.8%

Eligibility Criteria

Citizenship: Pakistani

Income: Minimum Income Rs. 40,000 –  50,000

Age Limit: For Salaried:

Minimum Age of 21 Year

Maximum Age of 60 Years

For Businessmen/ Self Employed Professionals (SEP’s):

Minimum Age of 21 Years

Maximum Age of 65 Years

Diminishing Musharakah

BankIslami uses a concept known as Diminishing Musharakah (DM) with its clients.

The concept implies the transaction agreement between the two parties will gradually diminish over time, whereas, the client will slowly purchase the share of its partner over an extended period.

It is the joint ownership of an asset between the Bank and the clientbased on ‘Shirkat-ul-Milk’.

The steps it comprises of are as follows:

  • The Bank divides its share of the units purchased into several Musharkah units where both the client
  • and the Bank have their assets.
  • The Bank will rent out its unit and share of ownership in the asset to the Client.
  • The units purchased by the bank will be gradually sold to the client by the end of the lease and as such the client will be the sole owner of the assets.

How It Works

  • Identify the vehicle you’d like based on Diminishing Musharakah (DM).
  • Fill in the required Application Form with the inclusion of the required documents.
  • Depending on the client’s eligibility the Bank will either accept or refuse the application if it doesn’t meet the Banks eligibility criteria.
  • Once approved, you will sign an agreement where you will accept to enact the Shirkat-ul-Milk Agreement and execute other transaction documents after the arrival of the Asset.
  • After all the necessary steps are taken, the booking of the vehicle is done by the Bank at the dealer. After the arrival and purchase of the vehicle by the Bank, partial/ Full payment will be made for either booking or purchase. From the client’s side, you would sign the Shirkat-ul-Milk Agreement and Payment Agreement, as well, as the purchase of the ‘Musharakah Units’. Where payments will be made by the client during a certain period
  • Expenses will be shared by the Bank and Client due to joint ownership, which includes registration, Takaful cost, etc. Expenses are accounted for while determining rental amount since the Bank pays the total expenses.
  • Withholding Tax/ Advance Income Tax  will be shouldered by BankIslami Pakistan (BIP), as the Name of the Vehicle is in BIP’s name
  • Advance to Financing Tax will be at 4% (depending on the Government of Pakistan) from Non-filers at the time of the agreement.
  • Purchase of the Bankislami share in units will be done periodically, with the client being the sole owner at the end of the transaction tenure.
  • In the likely case of Agreement Termination before the agreed period, you will have an option to buy the vehicle on the agreed buy-out price given in the Undertaking to Purchase Musharakah Units

How To Apply

There are branches of Islamic Bank in all major cities of Pakistan. If you live in cities which are operational areas of Islamic Bank, you can go to your nearest Islamic Bank and fill up the form and submit it to Islamic Bank along with necessary documents.
If the application is approved, you will be called by Islamic Bank.

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