NAIMA Proposes Raising Vehicle Hire-Purchase Loan LTV to 80% to Revive Automobile Sales
Kathmandu: The Nepal Automobile Importers and Manufacturers Association (NAIMA) has urged the Nepal Rastra Bank and the Ministry of Finance to increase the loan-to-value (LTV) ratio for vehicle hire-purchase loans from the current 60 percent to a maximum of 80 percent.
NAIMA stated that the existing 60 percent limit has contributed to a slowdown in the automobile market. High upfront payment requirements have made it difficult for many consumers to purchase vehicles, resulting in lower sales and affecting overall economic activity and government revenue.
The association highlighted that the automobile sector is a major contributor to government revenue through customs duties, excise duties, and value-added tax. It said higher vehicle sales would directly support revenue collection and stimulate related economic activities.
Pointing to the high liquidity in the banking system, NAIMA argued that raising the LTV ratio for vehicle loans would be a practical and effective way to mobilise capital. Hire-purchase loans, which are installment-based and backed by collateral, are considered a relatively safe lending segment.
NAIMA further noted that increased vehicle sales would benefit ancillary industries such as service centres, spare parts businesses, insurance, financial services, logistics, and technical services, generating both direct and indirect employment opportunities.
In view of these factors, the association has once again requested regulators to review the policy and set the maximum LTV ratio for vehicle hire-purchase loans at 80 percent. NAIMA reaffirmed its commitment to its mission of “Mobility for All” and pledged to continue advocating for policy improvements and coordination in the automotive sector.
