Banks Offer Auto Loans at Lower Interest Rates during Major Auto Exhibitions

Banks and financial institutions are offering auto loans at reduced interest rates to attract customers during the two major automobile exhibitions in the capital.

The Nepal Automobile Importers and Manufacturers Association (NAIMA) is organizing the five-day ‘NAIMA Mobility Expo 2025’ in Kathmandu starting Wednesday, August 6. Following that, the Nepal Automobile Dealers’ Association (NADA) is preparing to host the ‘NADA Auto Show 2025’ from August 19.

As the auto market heats up in the run-up to major Nepali festivals, banks and financial institutions are prioritizing auto loans, taking advantage of sufficient investable funds and offering attractive loan schemes with lower interest rates and other benefits.

Banks have announced that they will offer auto loans by adding a premium ranging from 0.25 percent to 5 percent over their base rates. According to published notices on monthly interest rates, Nepal SBI Bank is offering the most competitive rate, adding just 0.25 percent premium to its base rate for personal vehicle loans. Most other banks are offering loans with premiums of around 3 percent above the base rate.

Devendra Raman Khanal, CEO of Rastriya Banijya Bank, said that the auto loan segment has become a priority as automobile expos and festivals draw near. “With interest rates currently low, customers’ interest in vehicle loans has increased,” he said. He added that banks are prioritizing auto loans due to sufficient liquidity and reduced interest rates.

Base rates have also declined significantly. Among commercial banks, Standard Chartered Bank currently has the lowest base rate at 4.9 percent as of mid-July. The average base rate of commercial banks has fallen to 6.1 percent.

Two years ago, amid high current account deficits and declining foreign currency reserves, Nepal Rastra Bank (NRB) had tightened auto loan policies by increasing risk weights on vehicle financing to discourage automobile imports. However, as external sector indicators of the economy have gradually improved, the central bank has lifted such restrictions.

According to NRB data, banks and financial institutions invested Rs 130.94 billion in the hire purchase category by mid-June of the fiscal year 2024/25, marking a 5.5 percent increase compared to mid-July of the previous fiscal year 2023/24.

Of this, hire purchase loans for commercial purposes rose by 1.8 percent, while those for personal use surged by 14.4 percent.

Bankers note that rising consumer interest in electric vehicles (EVs) has also prompted increased investment in the sector. Although NRB has not introduced a separate provision for EV financing, many banks are offering slightly more favorable premium rates for electric vehicles under their auto loan schemes.