In Nepal, owning a vehicle is a dream for many, but the upfront costs can often feel out of reach. Thankfully, vehicle loans in Nepal offer an excellent solution to help you achieve that dream without paying the full amount upfront. Whether you're looking to buy a new car, motorbike, or a used vehicle, financial institutions in Nepal offer various loan options to help you.
In this blog, we’ll guide you through vehicle loan process in Nepal, from eligibility to the application process, documentation, and repayment terms.
Firstly, We advice all the applicants to be attentive throughout the process of auto loan processing because it seems to be a simple but it is not. So, one must go through all the research through different banks and get the vehicle loan at best possible prices and through this blog will be helping you through the documentation process so, that your work will be hassle free.
What is a Vehicle Loan?
A vehicle loan is a type of financial assistance offered by banks or financial institutions to help you purchase a car, motorbike, or any other vehicle. In exchange for the loan, you agree to repay the borrowed amount with interest over a fixed period, typically through monthly installments.
It’s an ideal option for those who can’t afford to pay the full price upfront but can make regular payments over time.
Purpose of Vehicle Loan:
- To purchase a new vehicle for either business or personal use.
- To purchase second hand vehicle for either business or personal use.
Key Features of Vehicle Loan:
- Amount of Loan: Mostly depends upon banking policy ranging from 50% to 80% of the Quotation price of the vehicle.
- Income Sources: There must be regular income source of the applicant so, bank have the guarantee of continuous installment repayment.
- Collateral requirement: Applicant must have a property to back up a vehicle loan with proper real time valuation.
- Down Payment: When you take out a vehicle loan in Nepal, you’ll generally be required to pay a down payment of around 10-20% of the vehicle's total cost. The exact amount can vary depending on the type of vehicle you’re purchasing and the bank’s policies. For used vehicles, this down payment may be higher.
- Repayment Period: Can range from 5 to 7 years with some banks offering moratorium period with an Equated Monthly Installments (EMIs).
- Prepayment: If the applicant is willing to pay the full amount before the maturity date, then he/she needs to pay the prepayment charge to the banks according to the rules and regulation of the banks.
- Service Charge: You need to pay certain amount of money as a service charge as per the rules and regulations of the bank for the loan processing.
- Interest rate: The base rate is the rate of interest decided by the Central Bank of Nepal and particular bank can add premium on base rate depending upon their policies.
Steps for Processing the Vehicle Loan:
Step 1: Visit multiple banks to know about the terms and conditions about the loan and choose the best one according to your comfort and requirement.
Step 2: After choosing the bank, you need to apply for the loan giving all the details and reasoning for the loan application.
Step 3: Submit all the required documentation.
(You must submit all the document at once so that you don’t have to visit the bank very often and your loan processing will be completed within 7 working days depending upon the bank rules and regulations.)
Step 4: After all the documentation done from your side and approval from bank, you need to visit the bank for signing the legal document upon the call from the bank and you need to pay the service charge for the loan processing according to the policy of the banks. While visiting, you need to take 2 people as the witness for the loan application as well as the guarantor for the loan amount.
Step 5: After signing the document, the documents signed by you is verified from bank side and after verifying all the documents the loan is sanctioned and disbursed to you fully or partially as per decided in the beginning of the application of loan.
Eligibility Criteria for Vehicle Loan Processing in Nepal:
- Any Nepalese citizen having 18 years at the time of loan origination
- Individual having adequate, stable, steady and regular source of income to serve installment and interest.
- Company (Pvt./Public)/Proprietorship/Partnership (duly registered with the concerned government authority) proposing to use vehicle for personal/private/commercial use.
- Borrower should be professional (for professional vehicle loan)
Documents Required for Vehicle Loan:
- Citizenship and photo of all the persons involved in loan processing
- Firm registration certificate (If business income)
- PAN/VAT certificate (If business income)
- Other Vehicle certificates/ documents ( like VAT Bill, Insurance policy)
- Property documents with valuation report
- Tax clearance certificates
- Quotation of vehicle with details of price model, features etc.
- Income verification certificate with income statement as required by the bank.
- Audited financial statement and projected financial statement of business (if business income)
- Article of Association (AOA) and Memorandum of Association (MOA) (as required)
- Partnership Deed (as required)
- PAN Certificate (as required)
How Banks in Nepal Support Electric Vehicle (EV) Loans
Bank and financial institutions are lending vehicle loan for Electric Vehicle (EV) with high priority these days. We hope these basic things and steps will help you in processing Vehicle loan and drive your dream car home for your family in this new year 2082.
Conclusion
Getting a vehicle loan in Nepal can be a straightforward process if you follow the right steps and ensure you meet the eligibility criteria. By carefully selecting the best loan terms and being diligent with documentation, you can drive home your dream vehicle in no time.
If you have any questions about the vehicle loan process in Nepal or need further assistance, feel free to leave a comment below. We are happy to help!