KATHMANDU: Buying a new vehicle through a bank loan has become more affordable as commercial banks continue to lower their base rates, allowing borrowers to access auto loans at some of the lowest interest rates in Nepal’s history.
With lending rates falling month after month, customers can now secure vehicle loans at around 6 to 7 percent, depending on the bank and the negotiated premium.
According to the latest data from the Nepal Rastra Bank (NRB), the average lending rate has dropped to 6.73 percent. In comparison, lending rates had climbed as high as 15 to 16 percent around four to five years ago.
Banks generally price loans by adding a premium of up to 5 percent over their base rate. However, due to excess liquidity and weak credit demand, many banks are offering loans with premiums as low as 0.5 to 1 percent for eligible customers.
Several banks are also offering fixed-rate auto loans ranging from 6.5 percent to 9 percent, with repayment periods of five to seven years.
The timing could benefit buyers, as two major auto exhibitions are scheduled for August, where several new vehicle models are expected to debut. Low borrowing costs could make financing a new car more attractive.
Which banks offer the lowest rates?
Among Nepal’s 20 commercial banks, nine banks now have base rates below 5 percent.
Government-owned Rastriya Banijya Bank currently has the lowest base rate at 4.22 percent. With a minimum premium, borrowers may be able to secure loans at around 5.5 to 6 percent.
Everest Bank and Standard Chartered Bank Nepal also have base rates below 4.5 percent, at 4.38 percent and 4.29 percent, respectively.
Other banks with comparatively low base rates include Nabil Bank, Nepal Bank, Nepal Investment Mega Bank, Global IME Bank, Agricultural Development Bank, and Sanima Bank. Their base rates range between 4.5 and 5 percent, making vehicle financing available at around 6 to 6.5 percent, depending on the premium charged.
Some lenders, including Nepal Bank and Global IME Bank, have also introduced promotional auto loan schemes with interest rates below 6 percent.
The remaining commercial banks have base rates between 5 and 5.5 percent, allowing customers to access auto loans at around 6.5 to 7 percent.
Among commercial banks, NIC Asia Bank currently has the highest base rate at 6.04 percent, making its borrowing cost comparatively higher than its peers.
