KATHMANDU: If you are planning to buy a new vehicle, this might be the most opportune moment for two reasons.
First, bank interest rates are at their lowest in five years. As interest rates play a significant role for those buying a vehicle on an installment plan, a low interest rate reduces the overall cost of buying the vehicle.
Second, two major auto shows are being held this month, where dozens of new vehicle models are expected to be unveiled. The NAIMA Nepal Mobility Expo, organized by the Nepal Automobile Importers and Manufacturers Association (NAIMA), is underway in Kathmandu, while the 2025 Auto Show, to be organized by the NADA Automobile Association Nepal, is scheduled to kick off on August 19.
These events are offering customers a chance to explore and choose from a wide range of modern vehicles. Also, dealers are offering special discounts to attract buyers.
Since most vehicles are purchased on instalments, low interest rates make this an especially favorable time. Interest rates have nearly halved compared to three years ago. Banking lending rates, which had climbed to as high as 15–16% few years ago, have now fallen below 8%.
The main reason behind this decline is the drop in base rates of banks. Base rate refers to the rate at which banks can borrow money from the central bank. It serves as a reference point for banks to set their borrowing and lending rates. The average base rate now stands at 6.10%, the lowest since 2020.
Since most vehicles are purchased on instalments, low interest rates make this a favorable time as interest rates have nearly halved compared to three years ago.
Banks typically charge a premium of up to 5% on the base rate. However, the exact premium depends on the customer’s ability to negotiate and the liquidity situation. Some banks are even offering loans with premiums as low as 0.5%.
However, since the banking system currently has a liquidity of over Rs 600 billion, banks are offering auto loans at interest rates ranging between 6% and 7.58% to utilize their idle funds.
Base Rates of Banks Compared
Interest rates vary depending on the nature of the loan. At present, commercial banks are offering loans with premiums ranging from 0.5% to 5% above their base rate.
According to base rates published for the month of Shrawan (mid-July to mid-August), nine out of 20 commercial banks have base rates below 7%. Among them, state-owned Rastriya Banijya Bank Ltd has the lowest base rate of 4.89%. If the bank adds only a 1% premium, customers can access auto loans at just 6% interest.
Similarly, Standard Chartered Bank has a base rate of 4.9%. However, the bank currently does not offer auto loans.
However, it should be noted that banks raise their interest rate if the base rate rises.
Banks with base rates under 6% include Everest Bank, Nepal Bank, Nepal Investment Mega Bank, Nabil Bank and Global IME Bank. Loans from these banks may be available at interest rates around 7%, assuming that they add a 1% premium.
Similarly, banks such as Agricultural Development Bank, Sanima Bank, Machhapuchchhre Bank, Nepal SBI, Siddhartha Bank and Citizens Bank have base rates slightly below 6.5%. This means they can offer auto loans at rates between 7.5% and 8%.
Meanwhile, Laxmi Sunrise, Kumari Bank, Prime Commercial, Himalayan Bank, and Prabhu Bank have base rates ranging from 6.5% to 7%. Among the 20 commercial banks, only NIC Asia Bank has a base rate exceeding 7%, at 7.18%.
However, it should be noted that banks raise their interest rate if their base rate rises.
