KATHMANDU: Demand for vehicle purchase loans has increased sharply in the first half of FY 2025/26 (mid-July 2025 to mid-January 2026). Hire purchase lending for vehicles has grown at a much faster pace compared to overall credit expansion.
According to data from the Nepal Rastra Bank, hire purchase loans increased by 7.1 percent in the first six months of the fiscal year. In comparison, overall bank lending grew by only 3.6 percent during the same period.
In monetary terms, banks and financial institutions disbursed Rs 9,119.2 million in new hire purchase loans during the six-month period. Total outstanding hire purchase lending rose from Rs 128,690 million in mid-July 2025 to Rs 137,810 million by mid-January 2026. Of this, commercial banks alone account for Rs 122,700 million.
Loan disbursement increased for both commercial and passenger vehicles during the review period. In the first six months of FY 2025/26, lending for commercial vehicles rose by 7.9 percent, reaching Rs 6,797.1 million. Similarly, passenger vehicle loans grew by 5.5 percent to Rs 2,322.1 million.
The rise in financing reflects the gradual improvement in vehicle demand and sales in recent months, supported by lower interest rates and improved market sentiment.
Bank lending rates are currently at historic lows. The average base rate of commercial banks stands at 5.33 percent. Some banks are offering vehicle loans at a premium as low as 0.5 percent above the base rate.
As a result, customers are able to secure car loans at around 6 to 6.5 percent interest. With borrowing costs at their lowest levels, many buyers are taking advantage of the opportunity to finance vehicle purchases.
Banks are also launching competitive vehicle loan schemes to attract customers, especially at a time when credit demand in agriculture, manufacturing, and industrial sectors remains weak due to continued economic slowdown over the past three years.
Vehicle and share market segments, however, are seeing stronger loan demand. Banks are expanding lending in these sectors and offering longer repayment tenures of up to seven years for vehicle loans.
Competition is strong among large commercial banks in the hire purchase segment.
Global IME Bank has disbursed the highest amount of vehicle loans, totaling Rs 15,720 million. This represents 12.81 percent of total hire purchase lending by commercial banks. The bank currently has a base rate of 5.16 percent and is the largest bank in Nepal in terms of paid-up capital.
Among the major lenders, Nabil Bank has disbursed Rs 12,420 million in hire purchase loans, followed by Everest Bank with Rs 11,750 million and Rastriya Banijya Bank with Rs 10,840 million. Everest Bank and Rastriya Banijya Bank also offer some of the lowest base rates in the market, at 4.73 percent and 4.42 percent respectively.
In the Rs 5,000-7,000 million range, Himalayan Bank has extended Rs 7,070 million in vehicle loans. NMB Bank follows with Rs 6,730 million, while Sanima Bank has disbursed Rs 6,700 million. Prime Commercial Bank has provided Rs 6,250 million, Nepal Investment Mega Bank Rs 5,940 million, Agricultural Development Bank Rs 5,480 million, and Prabhu Bank Rs 5,460 million.
Other banks have also maintained notable exposure in the hire purchase segment. Citizens Bank International has disbursed Rs 4,700 million, Siddhartha Bank Rs 4,420 million, and Nepal SBI Bank Rs 3,620 million. Kumari Bank and Machhapuchchhre Bank have each extended Rs 3,530 million, while Laxmi Sunrise Bank stands at Rs 3,130 million. Nepal Bank Limited has disbursed Rs 2,450 million and NIC Asia Bank Rs 1,720 million.
Among the 20 commercial banks, foreign-owned Standard Chartered Bank Nepal has the lowest hire purchase exposure, disbursing Rs 1,180 million as of mid-January 2026. Despite offering a competitive base rate, the bank has maintained a relatively conservative lending approach in the vehicle finance segment.
