Was HBL’s 7.5% CarLoan a Marketing Tactic?

The prospect of owning a car is very special, as it represents the financial independence of an individual in a lot of countries. Recent years have been very kind to the auto-financing in Pakistan. When the auto financing was launched back in 2004, the banks decided to open their auto-financing based on easy credit, which turned out to be a real benefit for Pakistanis, because car loans were sanctioned by 14-18% by banks. But this market leading expansion was brought to a sudden halt in 2010-2011, when the country’s banking sector decided to adopt extreme measures to counter high default rates. The reason being, till 2010 more than 265.5 billion rupees had totalled up the consumer finance sector, which included Car loan of approximately up to 66.4 billion rupees. Because of the strict measures to fight high default rates, car financing became more difficult and market displayed a dismal picture of -3.9% growth in the year 2011.

But these strict policies weren’t imposed for very long; the country’s improving economical footing had brought in some investors who saw the potential. Companies had started to invest more in auto-financing to afford their fleet of cars. At the end of fiscal year 2013-14, auto-financing sector witnessed a momentous growth of 371.4 billion rupees and the credit to private sector posted an all-increasing growth of 11.1%. In 2015, when the government decided to allow car loan of up to 9 years old vehicles by making some amendments, the growth of the market increased by 20% as compared to previous year’s market.

So according to the picture that is painted above with market statistics, you might be wondering how is it related to this blog entry? Well, a little bit market insight was needed to pave the way for this particular entry.


HBL 1.0

And now, we come to address the ‘elephant in the room’. Earlier last month, HBL launched perhaps the lowest mark-up rate auto-finance scheme in the recent history of auto-financing in Pakistan. And as per company’s advertisement, this scheme had an unbeatable 7.5% mark-up per annum and lowest insurance rate of 2% on HBL Car Loan. The offer was valid from 1-10th September, 2016.

This blog entry is particularly aimed at why and what has HBL achieved by introducing this scheme. Apparently, the bank -celebrating its 75th birthday- decided to launch this scheme. And, as per a company official

The response we received in the short duration of this scheme was unexpected

As per an industry specialist:

HBL has managed to convince people (with this scheme) who were planning to apply for a car loan next year, which in simple words mean that HBL has managed to capture clients in advance and is in quite a lead as compared to other banks

Till now everything seems to be fine for the bank and the consumer. However, in reality things aren’t as smooth as the bank is trying to portray to its customers. There is a TAT (Turn Around Time), which is a time limit allotted to each case and normally it is off 10-15 days for the processing of a case. However, in the context of this scheme, the time frame for a normal TAT has elapsed (As the scheme started lasted till 1-10th). And sources report that so far not a single car has been released under this scheme. Moreover, a select few people have been approached by the bank with the following message:

It is to inform you that your Car Loan application under the HBL 75th Anniversary special offer is in process. You are requested to please contact your branch for provision of further information or documents in relation to your application.

As we mentioned earlier, this message has been delivered to a few people and so far, (according to our sources) no car has been released under this scheme. Apparently, the bank has played it safe by getting people to sign on a clause in their ‘Terms and Conditions’ -TAT does not apply to this scheme-. In simple words, that avenue of legalities has been closed and now the only thing customers can do is to withdraw their cases or inquire about the case updates from their relevant branches. It should also be noted that customers should expect to hear something along these lines:

Sir/Madam, you will be notified once any progress is made. In the meantime, you are advised to have the recent salary slip with you

Before we move on, it is imperative to mention that the acquisition of salary slip from the customer at the month turnover, is not a discrepancy. It is required (by almost all banks of Pakistan) to attach recent salary slip with each case for its processing and approval. With legal grounds closed, it seems that the bank is trying to hold its customers with stalling tactics by utilizing the new salary slips, which is very strange as the agents are compensated for the clearance of each case.

And now, we come to the question we asked in the topic of this blog entry “Was HBL 7.5% Car Loan a Marketing Tactic?” It would seem so, as the bank managed to gain a lot of applications with its lucrative offer of the lowest mark-up rates of 7.5% (per annum). The only point of concern is, that the bank managers themselves do not seem to be educated on the bank’s policy on this scheme and the lack of evidence of any released car under this scheme is painting a very bleak picture and raising a point of serious concern. We hope that the bank management releases some sort of timeline or some solid words in this regard, as a lot of Pakistanis will be waiting anxiously to hear about the progress of their cases.

  • ABKhan

    Are you trying to say TAT (Turn Around Time) when you said TAD?

  • Ali k

    I had also applied for the loan. Have got confirmation from the bank. They have come to verify my details from my office. Have also verified my home address.
    So progress is definitely being made.
    I also asked a friend in HBL about the delay and he said that they weren’t expecting this kind of response. they have got close to 23000 applications and they don’t have the manpower to deal with all these applications so the speed is very slow.
    And one of my friend has also got a letter from bank stating that his application has been approved. He is about to book a car now

  • Rizwan

    My Application also approved and i got the only text message from the Bank that i received that your application for car loan has been approved please contact your Branch Manager. and AlHamduAllah its in Booking phase.

  • Kamran Lasi

    one of my realtive got the final approval, then all of the sudden he decided to change the car, so again all the documentations like,( car documents, downpaymnt cheque ) have to submitted again. new time line is almost 10days. This means, they are actually approving or issueing loans.

  • Haris Javaid

    is it possible to change the car after the case approves? at the same 7.5%?

  • Tayyab Gujjar

    i got approval
    Now my car is in booking phase
    so please do miss guide people on this forum

  • Tahir Shabeer

    I have got the call from HBL branch that my case is in approval persons list and need to arrange the initial amount that needs to be deposit in HBL account. Going to book a Swift.

  • Syed Uzair Uddin

    “And sources report that so far not a single car has been released under this scheme”
    Please bomb those shit sources..Cars already booked under this scheme are in thousands. huge no.s already delivered. Yeah response is 15x the capacity of the department and everyone is working 14-15 hours daily to cover up the work even on Saturdays.

  • Saleem Khan

    Seems writer application is rejected 😀

  • Guest

    “they don’t have the manpower to deal with”

    Again and again we see the stupidity of overselling and underdelivering. First time it was Ufone giving out their SIMs for free (back in 2004). Then it was ITCN Asia. Now it has become routine for companies to offer something and when the crowd comes in, they cannot control. Best example is all that sales on that crappy lawn in which perfectly educated aunties become absolute vixens over some small piece of cloth which cannot even cover the skin appropriately.

  • Muhammad Umar Ali

    No car yet has been launched…… We have also applied for 3 cars. one is under process… every week they demand something, like plz give bank statement again, plz give salary slip, or hr letter…. One case is rejected after all process saying that your office is far away from your house. and there is still no call for 3rd application

  • Imdad Lashari

    hey kamran ,how are u buddy, its me your buddy from hamdard university ,howz it going?

  • Zain Shah

    You want Pak wheels to actually miss guide people ? I doubt you ever applied !!

  • Saad Bin Rais

    My Case is approved and I have issued downpayment cheque 8 days back. Now waiting for the PO from HBL…Finger crossed…
    Will update if get any information from HBL 🙂

  • khurram shahzad

    My Case is also approved and I have deposited downpayment 7 days back. Now waiting for the PO from HBL…

  • Saad Bin Rais

    And now they are saying that they lost the signed agreement, now banker is coming to get it signed again. I think HBL is only gaining time for that or there is something fishy in all this.

  • Saad Bin Rais

    Did you received PO from HBL and your vehicle is booked from Showroom….

  • Saad Bin Rais

    have you received PO of total amount from bank??? and your vehicle is booked on showroom???

  • Saad Bin Rais

    What are there comments now on PO….

  • Saad Bin Rais

    Atlast PO received today 🙂 now i m confirmed that HBL is issuing financing on this rate:)

  • Rai Nasir Abbas

    i applied on 5th September, still they are asking for bank statement even i have submitted bank statements of last three months consectively. day by day frustration increasing.