Car loan in Nepal: down payment, interest, and the real monthly cost
NRB caps car loans at 60% of value, so you bring 40% down. Here's the FY 2082/83 LTV rule, current auto-loan rates, a worked EMI on a Rs 42 lakh car, and the monthly cost beyond the EMI.
A colleague test-drove a Swift in Falgun, loved it, and walked into his bank assuming the Rs 42 lakh sticker meant he needed maybe Rs 8–10 lakh to get started. He'd seen the bank advertise car loans and pictured a small down payment, the way home loans work.
The relationship manager's first number stopped him cold: Rs 16.8 lakh down. Forty percent. He'd budgeted for less than half of that. The gap between what people assume a car loan covers and what NRB actually allows is the single most common surprise in the showroom, so it's worth walking through before you fall for a model.
Why the sticker is so high
Before the loan, the price. A car that costs the equivalent of Rs 12–15 lakh landed at the border can sell for Rs 40 lakh-plus in a Kathmandu showroom, and the entire gap is tax.
Nepal stacks four levies on an imported petrol or diesel car, applied cumulatively so that each tax is charged on the total including the one before it:
| Levy | Range |
|---|---|
| Customs duty | 40–80% |
| Excise duty | 10–80% (rises with engine size) |
| VAT | 13% |
| Road construction charge | ~2% |
For petrol cars the excise climbs with engine size: up to 1000cc carries roughly 80% customs plus 60% excise; 1001–1500cc around 80% plus 70%; 1501–2000cc around 80% plus 80%. Compounded with VAT, the total tax burden commonly lands at 200–300% of the car's landing cost. That's the real reason a 40% down payment in Nepal is such a heavy number: 40% of an already tax-tripled price.
This is also why EVs are taxed so differently. Their duties are tiered by motor power, not engine size, and start far lower: up to 50 kW carries 15% customs and 5% excise. Budget 2082/83 left EV duties unchanged. So the EV keeps a large tax advantage at purchase, even though, as below, it no longer gets a financing advantage.
The 60% rule and your down payment
NRB's mid-term review in February 2025 set the loan-to-value cap for private vehicles at 60%. Before that, EVs could be financed up to 80% and petrol/diesel cars at around 50%; the review unified both at 60%, which tightened EV financing and loosened petrol financing to the same line.
Sixty percent loan means forty percent down. What that looks like across some common Suzuki models (approximate showroom price, before registration; trims vary):
| Car (approx. showroom) | Loan at 60% | Down payment (40%) |
|---|---|---|
| Alto K10 — Rs 30 lakh | Rs 18 lakh | Rs 12 lakh |
| WagonR — Rs 34 lakh | Rs 20.4 lakh | Rs 13.6 lakh |
| Celerio — Rs 38 lakh | Rs 22.8 lakh | Rs 15.2 lakh |
| Swift — Rs 42 lakh | Rs 25.2 lakh | Rs 16.8 lakh |
Those are mid-trim figures; entry trims run lower and top trims higher (the Swift alone spans roughly Rs 39–52 lakh), and the price moves with every duty revision. The structure is the point: whatever the sticker, you finance 60% and bring 40%.
One narrow exception exists. After the September 2025 unrest, NRB allowed up to 80% LTV for businesses replacing vehicles destroyed in the disruption. For an ordinary private buyer in 2026, plan on 40% down.
What the loan costs: rates and EMI
Auto-loan rates have fallen hard. They peaked near 15–16% about three years ago and now sit at multi-year lows, with several banks' base rates under 5%. As of FY 2082/83, floating rates on a comparison table looked like this:
| Bank | Floating rate |
|---|---|
| Nepal Bank | 5.17–7.17% |
| Nabil | 5.58–7.58% |
| NMB | 6.23–8.23% |
| Global IME | 6.39–8.39% |
Fixed rates run higher, often in the 9–11% range (Global IME's fixed sat around 8.99–10.99%). Floating rates are built as a base rate plus a premium and reset periodically, the same mechanism as a floating home loan: cheaper today, but the rate can climb if base rates rise.
A worked EMI, using a Nepali auto-loan calculator's example: a Rs 42 lakh car, 40% down (Rs 16.8 lakh), a Rs 25.2 lakh loan at 9% over 5 years (60 months) comes to an EMI of about Rs 52,311 a month. The reducing-balance formula behind it is the same one used for two-wheeler EMIs:
EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]
Stretch that same loan to 7 years and the monthly figure drops, but the total interest paid rises. Shorter tenure, heavier monthly, less interest overall; longer tenure, the reverse.
The cost the EMI doesn't show
The EMI is the number every buyer fixates on. It's not the monthly cost of owning the car. Four other lines stack on top.
Comprehensive insurance. While the loan is active, the bank requires a comprehensive policy with itself named as payee, even though only third-party cover is legally compulsory in general. On a Rs 40 lakh car the comprehensive premium runs to several thousand rupees a month. The third-party-versus-comprehensive breakdown shows how that premium is built and what it actually pays out.
Road tax. Bagmati's annual vehicle tax for cars ranges from about Rs 22,000 for the smallest engines to Rs 65,000–70,000 for the largest, plus a small renewal fee, and it held steady in FY 2082/83. Spread over the year that's roughly Rs 2,000–5,000 a month. The annual road-tax post lays out the rate card and the penalty stairs for paying late.
Fuel and servicing. The variable cost that depends entirely on how much you drive. For a sense of whether a car earns its keep against the alternatives, the bike vs car vs rideshare comparison runs the total-cost-of-ownership math, and the EV vs petrol break-even covers the running-cost gap.
Processing fee. A one-time charge of up to about 0.75% of the loan, paid upfront when the loan is disbursed.
Add it up and the Rs 52,311 EMI on that Swift is closer to Rs 57,000–62,000 a month once insurance and road tax are folded in, before a single litre of petrol. That's the number to test against your budget, not the EMI alone.
EV: a tax break, not a loan break
A quick note for anyone weighing an electric car, because the rules changed in a way that catches people out. EVs once enjoyed both a tax advantage and a financing advantage. The financing advantage is gone: since February 2025, EVs sit at the same 60% LTV as petrol cars, so you bring 40% down either way. The dealers' association publicly asked NRB to restore the 80% EV rate and was refused.
What survives is the duty gap. An EV's import taxes are a fraction of a comparable petrol car's, so the sticker price is lower for similar size, which means your 40% down payment is a smaller rupee figure. The case for an EV in Nepal now rests on the purchase-tax saving and lower running cost, not on an easier loan.
What you actually need to know
Three takeaways.
- Bring 40% down. The 60% LTV cap applies to petrol cars and EVs alike, so on a Rs 42 lakh car you need roughly Rs 16.8 lakh upfront plus registration costs. The headline price is high because tax runs 200–300% of landing cost, which makes that 40% a heavy number.
- Rates are low, but the EMI isn't the cost. Floating auto rates near 5–8.5% are at multi-year lows. The real monthly cost adds comprehensive insurance and road tax on top, pushing a Rs 52,000 EMI past Rs 58,000 before fuel.
- EVs save on tax, not on the loan. The old 80% EV financing perk is gone; both fuel types are at 60%. The EV case now rests on lower duties and running costs.
Weighing a specific car and want the all-in monthly number? Email parjanya57@gmail.com with the price, your down payment, and the tenure you're considering. Worked cases help other readers run their own.
This post is part of the Nepal Money Basics guide — the big-ticket decisions section.