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22 Jan, 2025

Auto Loan Rates in Nepal: Step-by-Step Guide to Get the Best Deal

Dare we say, owning your dream car no longer has to stay just a dream anymore! Whether going on your long-awaited road trips with family or simply enjoying the convenience of your vehicle, it’s all possible within your reach with the ‘Right Auto Loan.

But there are so many auto loan offers available from various banks, each claiming to have the best deal for you. So, finding the ‘Right Auto Loan’ is crucial before turning your dream into reality. Do not worry! In today’s blog post from Saral Banking Sewa, we will help you find the best auto loan available to make your dream a reality with an in-depth analysis and comparison of current interest rates.

An image illustrating an auto loan concept, featuring a car and financial elements, highlighting the benefits of auto financing

What is an Auto Loan & Why You Should Go for It?

An auto loan is a type of loan that allows you to borrow money from a lender, typically banks and financial institutions, to purchase your dream car or other vehicle. It allows you to pay a percentage of the vehicle price as a down payment and the remaining amount in fixed installments plus interest over a set period of time, usually ranging from 3 to 7 years, though it can extend up to 10 years, depending on the bank. During the entire loan term, your purchased vehicle serves as the collateral.

Regarding the interest in auto loans, there are currently two interest rates: fixed and variable. 

  • Fixed Interest Rates: As the name suggests, a fixed interest rate remains constant throughout the loan term, regardless of economic fluctuations. This provides peace of mind, knowing that your interest rate will never increase. However, fixed rates are typically higher than variable rates, as the risk to the bank is greater.
  • Variable Interest Rates: Also known as floating rates, these can change periodically based on market conditions. While they are typically lower than fixed rates, they lack predictability and may increase in the future. As a result, there is no guarantee of a consistent rate, meaning the next installment payment may surprise you every time.
A visual representation of auto loans in Nepal, showcasing a car on a scenic backdrop, symbolizing the accessibility of vehicle financing

Note: The fixed interest rate may vary depending on the duration of the loan term. For example, a Global IME bank has a fixed interest rate of 10.49% to 11.49% for loan terms of up to 5 years and has rates of 11.49% to 12.49% for above 5 years.

How to Find the Right Auto Loan?

Given the importance of choosing an ideal auto loan, you must do proper research, comparison, and financial planning so that owning your dream vehicle gives you maximum satisfaction without any regrets. So, here are a few things to do before opting for an auto loan.

1. Determine Your Budget

Before anything else, you must decide how much you can afford to pay monthly and estimate additional costs like insurance, maintenance, fuel, etc. Once you have determined the budget, you can do precise financial planning to support the auto loan without causing any issues to your finances. Use Saral Banking Sewa’s EMI calculator tool to calculate monthly payments.

2. Compare Auto Loan Offers

Every bank and financial institution offers auto loans, so try to explore all available options, ensuring you don’t miss out on any suitable deals. During research, check each offer's interest rates, eligibility criteria, required documents, etc., to find out what suits your needs the most. To make your research easy and efficient, use our Saral Banking Sewa’s auto loan comparison tool to compare every offer in one place.

3. Assess Loan Terms

Depending upon the banks, the auto loan terms may vary. So, consider loan tenure, down payment, prepayment penalties, and processing fees prior to choosing an auto loan option. Also, do not hesitate to ask anything you do not understand to avoid any hidden costs in the future.

4. Negotiate the Deal

You can negotiate with the bank to lower interest rates or reduce processing fees if you have a strong financial history. Additionally, banks often offer special discounts and interest rates on auto loans during the festive season, so if possible, wait for those times for better deals.

5. All Set to Apply

Once you have the best auto loan offer, prepare the necessary documents and apply accordingly. Lastly, always read the fine print before signing so there’s no surprise in the future.

Auto Loan Interest Rates in Nepal: Compare and Find the Best Bank!

As of the fiscal year 080/081, Nepal's current auto loan interest rate remains between 6.39% – 15%, depending on banks and financial institutions. Following the latest interest rate revision at the start of the third quarter, Nepal Bank Limited now offers the lowest floating interest rate, ranging from 6.39% to 8.89%, with a loan tenure of up to 7 years. 

Likewise, NMB Bank offers an 8.89% fixed interest rate, as per the available data. Besides that, almost every other commercial bank, including Everest, Nepal SBI, Machhapuchhre, Rastriya Banijya, NMB Bank, etc, has fixed interest rates of 9% or more, whereas floating interest rates are between 7% and 15%.

To compare the interest rates set by other Nepali banks for auto loans, visit Saral Banking Sewa and use our comparison tool. Along with interest rates, you can easily access other important information, such as tenure period, processing fees, eligibility criteria, EMI calculation, and necessary documents, all in one place.

An image depicting various auto loan options in Nepal, featuring a car and financial symbols, illustrating the accessibility of financing for vehicles

Final Thoughts

Even though the process of securing an auto loan may seem complex, it necessarily does not have to be. By using the comparison and EMI tools of Saral Banking Sewa, you can easily find the best deals available and make informed financial plans to turn your dream of owning a car into a sweet reality.