Interest rates on car loans in Azerbaijan have risen sharply over the past year, reflecting broader changes in the country’s banking sector.
According to the Central Bank of Azerbaijan, the average rate on auto loans stood at around 10% at the end of 2024. By June 2025, it had climbed to 12%, and by September reached 13%, marking a significant uptick for consumers.
Aqif Nasirli, chairman of the Center for Liberal Economists, told Bizim.media that the 3–4 percentage point increase is driven by several converging factors.
“First, banks are facing higher costs to attract capital,” he said. “They must offer higher interest rates to depositors or borrow on financial markets at more expensive terms. That directly affects the rates offered on loans. And even with this increase, auto loans remain one of the segments where the rise was relatively moderate.”
Another key factor is risk. Nasirli noted that banks consider auto loans riskier because vehicles depreciate quickly and the number of problematic loans has risen.
“As risks grow, so do interest rates,” he said.
The rising cost of vehicles also plays a major role. Car prices in Azerbaijan have increased significantly, which means the average loan size has grown. Larger loans elevate potential losses for banks, pushing them to adjust rates upward.
Import-related costs – from rising prices for foreign-made cars to more expensive spare parts and logistics – have added further pressure. Inflation, meanwhile, has increased banks’ operating expenses and lowered the real value of long-term lending.
“All these factors – higher bank funding costs, increased credit risk, and more expensive vehicles – have combined to push auto loan rates upward,” Nasirli said. “And this may not be the ceiling. We could see rates rise further.”
