Getting a loan in Nepal used to mean endless paperwork and multiple visits to bank branches. While the process still requires careful documentation, things are changing fast. With the rise of financial inclusion, digital KYC, and new micro-lending apps, accessing credit has become more streamlined for students, salaried workers, and business owners alike.
Whether you are planning to build your dream home, buy a new bike, or fund your startup, understanding the correct process is half the battle won.
So, this guide is for students, salaried workers, professionals, business owners, and startups who want a practical, no-noise process: what loan to choose, how banks decide approval, what documents you’ll need, and how to improve your chances of getting approved.
Nepal’s banks and financial institutions offer multiple loan categories. The best loan is not the one with the lowest rate on paper; it’s the one that fits your income style, purpose, and repayment comfort.
Below are the most common loan types you’ll find in Nepal (and yes, you should compare loan options across banks before choosing).
A personal loan is an unsecured loan that can be used for almost any legitimate personal expense, such as medical emergencies, travel, weddings, or debt consolidation. In Nepal, banks also offer professional loans, a variant of personal loans tailored for doctors, engineers, chartered accountants, and other licensed professionals.
These loans are best suited for salaried individuals, professionals, and freelancers with a stable and verifiable income. Loan amounts usually range from NPR 100,000 to NPR 1,500,000, with repayment tenures of 1 to 7 years. Interest rates are generally higher (currently 5.8% to 10.94%) than secured loans, but lower for professionals due to lower risk.
Quick takeaway: Personal loans are designed for quick, flexible funding, but approval and overall cost depend on stable income, clean repayment history, and the lender’s terms, so compare the full conditions, not just the headline rate.
A home loan is a long-term secured loan used for housing-related purposes such as purchasing land, constructing a house, buying an apartment, renovating an existing home, or extending a property.
Home loans in Nepal typically offer longer repayment periods (often up to 30 or 35 years), making EMIs more affordable. The property itself acts as collateral, and loan amounts can go up to 60–70% of the property’s market value. Due to lower risk, home loans usually have more favorable interest rates (currently 5.73% to 11.41%) compared to personal loans.
Quick takeaway: A home loan is as much about clean property papers as it is about income, so do compare total cost and conditions early, because you’ll live with the terms for years.
Education loans support students pursuing higher studies in Nepal or abroad, covering tuition fees, living expenses, and other academic costs. These loans play a key role in making quality education financially accessible.
Loan amounts vary based on the course, institution, and country of study, while interest rates are usually moderate compared to unsecured loans (currently 5.48% to 11.41%). Depending on the amount, collateral may be required, and a co-applicant, usually a parent or guardian, is commonly mandatory. Required documents include an admission letter, fee structure, academic certificates, and proof of financial background.
Quick takeaway: Education loans are approved on clarity, and strong admission proof plus a realistic repayment plan backed by a co-applicant makes the biggest difference.
Business loans are designed to support entrepreneurs and small to medium enterprises (SMEs) for purposes such as startup funding, working capital management, machinery purchase, or business expansion.
Common types include overdraft (OD), term loans, cash credit, and invoice financing. Banks assess business loans based on cash flow strength, repayment capacity, and the promoter’s business experience. Applicants are generally required to submit business registration documents, PAN or VAT certificates, financial statements, tax clearance, and a clear business plan.
Quick takeaway: For business loans, your paperwork is your credibility, so clean bank transactions and clear cash-flow records often matter more than a “big plan.”
Auto loans in Nepal cover two-wheelers, four-wheelers, and, in many cases, commercial vehicles used for business operations. These loans are typically secured through the vehicle itself, with the bank keeping a legal charge until repayment is complete, so paperwork like invoices, quotations, and hypothecation matters.
Since vehicles depreciate, banks may be conservative about the loan amount and repayment terms, especially for older models or commercial use. So, your income stability still matters, but the vehicle documentation and insurance requirements often shape the process timeline.
Auto loans work well when you need mobility for daily work or business operations and can comfortably manage EMIs without disrupting essentials. They can be risky when the vehicle becomes a “want” rather than a “need,” and the EMI starts competing with rent, school fees, or business working capital.
This is one of the most underrated loans in Nepal. If you already have a fixed deposit (FD) or an eligible deposit, many banks can provide a loan against it. Since the bank already holds your deposit as security, the process is typically faster, and eligibility is easier compared to unsecured loans. The biggest practical benefit is that you can access cash without prematurely breaking your FD, which may help you avoid losing interest benefits or disrupting your savings plan.
What makes this loan especially useful is its simplicity: the bank’s risk is lower because repayment is secured against your own deposit. That often means fewer documents, quicker processing, and clearer approval timelines. However, it’s still a loan, so you should understand the interest structure, repayment method, and what happens if you miss payments.
Also, loan amount limits and eligible deposit types vary by bank, so the smart move is to compare terms and conditions rather than assuming every FD-backed loan works the same way.
A gold loan is a secured loan where you pledge your gold ornaments to the bank or financial institution and receive cash against them. Because the lender holds the gold as security, approval is usually quicker than for unsecured loans, and the paperwork is generally lighter. In Nepal, gold loans are commonly used for urgent cash needs like medical bills, short-term business gaps, school fees, or seasonal expenses when you don’t want to disturb long-term savings or take a larger loan.
What makes gold loans unique is that your eligibility is driven less by salary and more by the gold itself, especially its purity and valuation. The approved loan amount depends on the institution’s valuation method, purity checks, and internal policy, so two lenders can quote different eligible amounts for the same jewellery.
Repayment styles can vary too; some products feel like short-term liquidity tools, while others are structured more like regular EMI loans. Since it’s easy to access, the main discipline is using it for short-term needs and repaying on time, so you don’t end up rolling it over repeatedly.
Digital or app-based microloans are small-ticket loans offered through mobile wallets and bank apps, designed for quick access to funds during emergencies or short-term needs.
Loan amounts are relatively small, typically ranging from NPR 5,000 to NPR 500,000, with very fast approval often within minutes. Approval is based on digital behavior such as KYC completion, transaction frequency, income patterns, and repayment history. These loans usually have shorter tenures, higher effective costs, and daily interest calculations, making them suitable only for short-term use.
Eligibility is the filter banks use to ensure that the money they lend will be repaid on time. While each bank has its own internal risk appetite, the general criteria are governed by Nepal Rastra Bank directives to maintain financial stability.
Being eligible doesn't just mean having a job; it means having a verifiable financial history that proves you are a responsible borrower.
At the core of eligibility is your legal status and your "financial character." You must be a Nepali citizen or hold a valid NRN status to apply for most loan products. Age is another critical factor, as banks want to ensure you have enough working years left to repay the debt. Furthermore, a clean history with the Credit Information Bureau (CIB) is mandatory; if you have defaulted on a small loan or had frequent cheque bounces in the past, your application may be rejected immediately.
Specific loans require specific proof of stability. For instance, a person applying for a personal loan needs to show they have been employed at the same organization for at least a year. On the other hand, a home loan applicant must prove they have the "equity" or down payment ready, as banks will not finance 100% of the property value. Each product has a different "stress test" that you must pass before moving to the documentation stage.
Personal Loan (Unsecured / Professional Loan)
Home Loan
Business Loan / SME Loan
Education Loan
Auto Loan
Loan Against the Fixed Deposits
Gold Loan
Digital / App-Based Micro Loans
Documentation is often the most time-consuming part of the loan process in Nepal. Banks require these papers to verify your identity, assess your income, and secure their investment. Having a "folder-ready" approach can speed up your application by weeks.
If you are an employee in a private or public firm, your primary document is your salary slip. The bank wants to see that your salary is deposited consistently into a bank account rather than paid in cash. This transparency builds trust and allows the bank to calculate your repayment capacity accurately.
Business owners must prove that their venture is a legal entity and is generating enough profit to cover the loan installments. The bank will look closely at your tax filings; if you under-report your income to save on taxes, your loan eligibility will also decrease. Consistent bookkeeping is your best friend when approaching a bank for an SME loan.
Many Nepali families rely on remittances from the Gulf, Europe, or the US. To use this income for a loan, you must provide proof that the money is entering Nepal through formal banking channels. Banks value "Inward Remittance" highly as it shows a steady flow of foreign currency into the household.
When you pledge land or a house as collateral, the bank must verify that the asset is legally sound and physically accessible. This involves a set of technical documents that confirm the boundaries, ownership history, and government-approved status of the property. Without these specific papers from the Land Revenue and Survey offices, a secured loan cannot proceed to the valuation stage.
If you’re wondering how to get a loan in Nepal or how to take a loan from a bank in Nepal, this is the practical process most banks and financial institutions follow. The steps below also help you avoid common mistakes like borrowing more than needed, applying without eligibility, or missing key documents.
Start with the number that fits your real need, not the maximum the lender offers.
Before filling out forms, confirm whether you qualify. This saves time and protects your credit profile.
Do not settle for the first bank you visit. Interest rates in Nepal can vary significantly between commercial banks, development banks, and finance companies. Beyond just the rate, look at the processing fees and the "Base Rate" of the bank, as this will determine how your interest changes in the future.
Key factors to compare:
You can compare all bank loans side-by-side on Saral Banking Sewa to find the most transparent deal.
Once you’ve decided on the lender and product:
After you submit, the bank starts verification. This step decides whether you get approved and on what terms.
Banks usually review:
Some cases may include phone calls, workplace verification, or site visits.
For secured loans like home loans, mortgage loans, or many business loans, collateral is valued before approval.
If the bank approves your application, you receive a sanction letter with the final terms.
It typically includes:
Read it carefully. Check for extra charges, insurance requirements, and prepayment rules before signing.
After you accept the terms:
This is usually the final step in how you apply for a loan in Nepal, but repayment discipline starts from the first EMI date.
Banks approve loans in Nepal when they see a simple picture: your income looks stable, your past repayment behavior is clean, and your monthly EMI stays within a safe limit. They use a combination of quantitative data (numbers) and qualitative data (trust) to make a final decision.
Banks want income that is predictable, provable, and likely to continue.
What helps most: stable income history, clear documentation, and clean bank statements.
Banks check your past repayment behavior because it predicts your future behavior. In Nepal, credit information is widely used in underwriting through the Credit Information Bureau system.
Practical tip: One clean year of repayment behavior can do more than a slightly higher income.
DTI (debt-to-income ratio) tells the bank how much of your monthly income is already committed to EMIs and other debt payments. Lower DTI means more breathing room.
Example (easy way to think about it):
If your monthly income is NPR 80,000 and your total EMIs (existing + new) become NPR 32,000, your DTI is 40%. That usually looks manageable. If total EMIs become NPR 56,000, your DTI is 70%, which is harder to approve unless the product rules allow it and your file is very strong.
For secured loans, collateral is not just “available or not.” Banks grade the collateral.
These are common “silent” factors that decide the final yes or no.
When people compare loans in Nepal, they often stop at the interest rate because it’s the easiest number to spot. But the real “total cost” of a loan is a bundle: how the interest is calculated, what one-time fees you pay upfront, and what charges apply if you prepay early or pay late.
This matters because two loans can look similar on EMI but end up costing differently over the full tenure. It also explains why a “lower rate” loan can sometimes feel more expensive once fees and conditions are added. The smart approach is to compare the full terms in writing, not just the headline promise.
Fixed interest means the rate stays the same for the agreed tenure, so your EMI remains predictable and easier to plan around. This is often preferred by first-time borrowers or families who want stable monthly budgeting for years.
Floating interest is usually linked to the bank’s base rate plus a premium, so the final rate can move when that benchmark changes. Because of that, your EMI may go up or down over time, depending on the reset rules and market conditions.
In Nepal, the reset frequency and how quickly changes reflect in EMIs can vary by bank and product, so it’s worth confirming the “when and how” before you sign.
A good way to decide is to match the rate type to your risk comfort.
Most importantly, don’t assume “fixed” always means fixed forever, or that “floating” always changes frequently; terms differ from lender to lender.
| Interest type | What it means for you | What to confirm |
| Fixed | EMI stays predictable | Is it fixed for full tenure or only a period? |
| Floating | EMI may change over time | Base rate link, premium, and reset frequency |
Quick takeaway: Fixed gives predictability; floating can change with base rate movements, confirm reset rules, and plan your budget accordingly.
Fees and charges can change the real cost of a loan, even when the interest rate looks attractive. Some are one-time costs you pay at the start, while others apply only in specific situations like early settlement or late payment. Secured loans (like home loans) usually add valuation and legal verification costs because the bank must confirm the collateral is legally clean. Since these charges vary by bank and product, always ask for a written fee breakdown and compare it before you sign.
Loan approval in Nepal is less about “convincing a bank” and more about removing doubts from your profile. Banks want to see that your income is real, your repayment capacity is comfortable, and your documents tell one consistent story. Many rejections happen not because the borrower is weak, but because the file is unclear, incomplete, or shows unstable banking behavior. The good news is that most approval blockers are fixable with a bit of preparation before you apply.
If your goal is a higher approval chance, focus on three things: clean transaction history, realistic EMI burden, and complete documentation. Also, choose the loan type that matches your purpose and your profile, because banks assess each product differently. A personal loan file isn’t judged like a home loan file, and a business loan file is a different game entirely. Below are practical, Nepal-relevant tips you can apply without trying to “hack” the system.
Many applicants fail because they treat the loan application as a casual request. One of the biggest mistakes is applying to five different banks at the same time; this makes you look "credit hungry" and desperate, which is a red flag for lenders.
Another common error is ignoring the "fine print" regarding prepayment penalties, which can be costly if you plan to close the loan early using a Dashain bonus or remittance. So treat this section as a practical checklist before you submit anything.
Quick takeaway: A clean, consistent file and realistic EMI planning prevent most loan headaches, and approval is easier when the bank has fewer doubts to solve.
Getting a loan in Nepal is a journey of preparation and comparison. While the process might seem daunting with its requirements for "Lal Purja" and tax clearances, it is designed to protect both the borrower and the lender. By understanding the types of loans, keeping your documents ready, and maintaining a healthy credit history, you can unlock the capital needed for your dreams.
Remember, the best loan is not just the one with the lowest rate today, but the one with the most transparent terms for tomorrow. Before you sign any agreement, use the financial tools available at Saral Banking Sewa to ensure you are getting a fair deal.
