21th August 2025, Kathmandu
The auto loan market in Nepal is experiencing a surge in competition, driven by an unprecedented increase in liquidity within the banking system. With banks holding over NPR 656 billion in excess funds, as reported by Nepal Rastra Bank, the focus has shifted from managing a liquidity crunch to attracting borrowers.
NADA Auto Show Bank liquidity
This surplus liquidity has sparked a battle for customers, with banks aggressively lowering interest rates and waiving service fees to secure new auto loan business. The NADA Auto Show has become the key battlefield for these competitive offers, giving consumers a golden opportunity to finance their dream vehicles at highly favorable terms.
The Liquidity Puzzle and Its Impact on Auto Loans
Nepal’s economy has not expanded at a pace commensurate with the growth of bank deposits. This has resulted in a significant amount of cash piling up in banks and financial institutions. Instead of remaining idle, this liquidity is now being channeled into lending, particularly in sectors with high demand like vehicle financing. For potential car buyers, this is excellent news. The pressure to deploy funds has forced banks to innovate and offer products that are more appealing than ever before.
The competition is a direct response to market dynamics. When banks have more money than they can lend, they must make their loan products more attractive.
This is why we are seeing interest rates at their lowest point in recent memory, with many banks offering auto loans at rates as low as 6% to 8%. This is a significant drop from previous years and a clear indicator of the intensity of the competition.
Spotlight on NADA Auto Show: Unveiling the Best Deals
The NADA Auto Show has proven to be the ideal platform for banks to showcase their competitive auto loan offerings. Several leading commercial banks have set up stalls to directly engage with customers and present their unique plans. This face-to-face interaction allows banks to tailor their offers and customers to compare options side-by-eye.
Here’s a breakdown of some of the most notable offers from banks at the event:
- Krishi Bikas Bank: This bank stands out with its low entry rate of 6.23%. It’s offering up to 60% financing for personal electric vehicles (EVs) and an even higher 80% financing for commercial vehicles, demonstrating a strong push towards commercial transport and EVs.
- Global IME Bank: Global IME has set its interest rate at a very attractive 6.99% and has reduced its service charge from 0.5% to 0.25%, making it one of the most cost-effective options available.
- Laxmi Sunrise Bank: Providing certainty in an often volatile market, Laxmi Sunrise Bank is offering a fixed interest rate of 7.99% for a full seven years. The loan covers up to 60% of the vehicle’s value, and this special offer is valid until Mangsir 14, creating a sense of urgency for potential buyers.
- Sanima Bank: Sanima Bank offers flexibility with different interest rates based on the loan tenure: 8.15% for seven years and a lower 7.99% for a five-year term. It also has a tiered financing model, offering 50% financing for traditional IC engine vehicles and a more generous 60% for electric vehicles.
- Himalayan Bank: Himalayan Bank is offering a standard 60% financing with a competitive interest rate of 7.5%, sweetened by a 0.25% discount on service charges.
- Nabil Bank: Nabil Bank is targeting the EV market with a special loan product at 6.74% for up to seven years. However, it maintains a strict requirement that the borrower’s monthly income must be at least twice the monthly installment amount, ensuring responsible lending.
- Nepal SBI Bank: Offering a range of options, Nepal SBI Bank has a tiered interest rate structure based on loan tenure: 7.99% for three years, 8.49% for five years, and 8.99% for seven years, allowing customers to choose a plan that best fits their long-term financial strategy.
- NMB Bank: NMB Bank uses a premium-based model for traditional vehicles, offering loans at their base rate plus a 4.5% premium. For EVs, the interest rate is a fixed 7.13%, showcasing another bank’s focus on promoting electric mobility.
What This Means for Consumers
This heightened competition is a significant win for consumers. Not only are interest rates at a historic low, but banks are also offering concessions on service charges and providing more flexible loan tenures, typically ranging from 5 to 7 years. This makes car ownership more accessible and affordable than ever before.
For anyone considering purchasing a new vehicle, especially an EV, now is the ideal time to explore financing options. The combination of low interest rates and generous loan terms means lower monthly installments and a reduced overall cost of borrowing.
The influx of liquidity in the banking sector has created a borrower’s market, and smart consumers can leverage this to their advantage. The NADA Auto Show serves as a perfect starting point to compare and secure the best deals available.
For more: NADA Auto Show Bank liquidity