Nepal Rastra Bank has issued a fresh set of rules for hire purchase companies, with several changes that matter directly to vehicle buyers.
The new framework caps the service fee at 1% and requires lending rates to be based on the company’s cost of funds, including equity cost and the weighted cost of borrowed funds.
Published rates can move by only 2 percentage points, while overdue instalment penalty interest is limited to 2 percentage points a year and cannot itself attract extra interest.
Loans can cover up to 80% of collateral value, though vehicle financing remains subject to the current 60% loan-to-value limit.
Companies must spread investment across multiple brands, keep exposure to one borrower or group within 30% of net worth, and ask for PAN on vehicle loans above Rs 2.5 million.
Borrowing is also capped at 10 times net worth, and minimum paid-up capital is set at Rs 300 million.
Writes on vehicle pricing, taxation and the Nepali auto market from ongoing tracking of distributor price lists. Editorial policy.
