Auto Loan LTV Rules in Nepal 2026: What Changed and Why

If you have tried to finance a car in Nepal over the past twelve months, you have probably heard three different numbers for how much a bank will lend you. That is not confusion on your part — Nepal Rastra Bank (NRB) genuinely changed the loan-to-value (LTV) rules for vehicle financing twice within a year, and a third adjustment arrived with the monetary policy for FY 2026/27. This guide lays out exactly what the current auto loan LTV limit is, how it got here, and what it means for the down payment you need to arrange.

A Timeline of How the LTV Rule Actually Changed

To understand today's rule, it helps to see the sequence. NRB has adjusted vehicle-loan LTV limits three separate times in roughly a year, and each change had a different policy motivation.

Stage 1: The old 80/50 split

For several years, the rule favoured electric vehicles outright: banks could lend up to 80% of an EV's value but only 50% for a petrol or diesel vehicle. This 80% ceiling for EVs and 50% for private internal combustion engine vehicles was the standard hire-purchase LTV limit before it was revised. The gap was deliberate policy support for EV adoption, but it also meant EV loans carried larger absolute exposure per vehicle at a time when banks were becoming more cautious about credit risk and foreign-currency outflow, since almost every vehicle sold in Nepal is imported.

Stage 2: The September 2025 reset to a flat 60%

As part of a broader post-crisis restructuring following the Gen Z-led protests, NRB tightened rules for vehicle financing, capping loans at 60% of the vehicle's value for both electric and personal-use vehicles and requiring buyers to contribute at least 40% equity. This simultaneously reduced the EV ceiling (from 80% to 60%) and raised the ICE ceiling (from 50% to 60%) — a rebalancing that dealers of petrol and diesel vehicles had lobbied for, while EV importers pushed back. A specific exemption was carved out at the same time: businesses replacing vehicles destroyed or damaged during the unrest could still access up to 80% LTV, so transport and logistics operators would not be stalled by the general tightening.

Stage 3: The FY 2026/27 monetary policy carve-out for large EVs

The most recent change is narrower in scope but significant for the transport sector. NRB fixed the loan-to-value ratio for large passenger electric vehicles at 80 percent, implementing a provision from the monetary policy for FY 2026/27 that took effect in mid-July 2026, letting banks finance up to 80% of the vehicle's actual valuation. That same 80% ceiling also covers loans replacing vehicles damaged during the Gen Z movement and commercially operated transport vehicles used by industries that were damaged during the protests.

A companion directive went further for public transport specifically. NRB raised the maximum LTV for large electric passenger vehicles used in public transport to 80%, cutting the required down payment to 20% from the previous 40%, through directives implementing the FY 2083/84 monetary policy. The same directive also allows up to 80% financing for replacing commercial vehicles and transport equipment damaged by the unrest, provided they are used for business purposes, while private-vehicle financing rules were left unchanged.

Current LTV Limits by Vehicle Category

*Individual banks may set an internal cap below the regulatory ceiling. NMB Bank's used-EV product finances up to 55% of the appraised value even though the regulatory limit is 60%. Regulatory limits are ceilings, not entitlements — your bank's credit policy, your income, and the vehicle's condition also determine your final approved LTV.

Why NRB Keeps Adjusting the LTV Ceiling

Three forces are pulling on this policy lever at once, and understanding them explains why the rule keeps moving instead of settling.

• Foreign exchange management. Nepal imports essentially every vehicle it sells, so a higher LTV translates directly into more foreign currency leaving the country through bank-financed vehicle purchases. Tightening LTV is one of the more direct levers NRB has to slow that outflow when reserves need protecting.
• Credit risk and non-performing loans. Vehicles depreciate quickly, and a loan written at 80% of value leaves the bank thinly covered if the borrower defaults early. Moving to 60% across the board reduced the loan-loss exposure per vehicle industry-wide.
• Targeted industrial and climate policy. The narrower 80% carve-outs for large public-transport EVs are not really about consumer lending at all — they exist to make electric buses financially viable for transport operators and support the shift away from diesel fleets in cities, without reopening the door to loose lending on private passenger cars.

Down Payment Calculator

Use this calculator to work out the minimum down payment and loan amount for your situation under the current LTV rules. It is a planning estimate, not a loan offer — your bank's final approved amount can be lower depending on your income and the vehicle's valuation.

Common Mistakes Buyers Make Under the New Rule

• Assuming every EV still gets 80% financing. Only large passenger/public-transport EVs qualify for the 80% ceiling. A personal electric hatchback is capped at 60% like any other private vehicle.
• Budgeting on regulatory maximums. Many banks lend below the ceiling, particularly for used or reconditioned vehicles. Ask for the bank's actual product LTV before you commit to a down payment plan.
• Forgetting that LTV applies to the bank's valuation, not the sticker price. If the bank's approved valuator assesses the vehicle below the dealer price, your loan amount — and required down payment — changes accordingly.
• Not accounting for insurance and registration costs on top of the down payment. A 40% down payment plus mandatory comprehensive insurance and registration fees is a meaningfully larger upfront outlay than the down payment figure alone suggests.

Frequently Asked Questions