Introduction

Loan interest is the cost of borrowing money. In Nepal, interest rates vary by bank, loan type, and your credit profile. Understanding how interest works helps you choose the right loan.

Types of Interest

  • Fixed rate — stays the same throughout the loan tenure
  • Floating rate — changes based on market conditions
  • Reducing balance — interest calculated on remaining principal
  • Flat rate — interest calculated on original principal (less favorable)

Current Rates in Nepal

Home loan rates in Nepal are commonly reported in the range of 10-13%, while personal loans are commonly reported at 12-16%. Auto loans are commonly reported between 10-14%. These are indicative market ranges as of October 2026 — verify current offers with NRB publications at nrb.org.np and directly with banks, as rates move with NRB policy and each bank's base rate. Always compare rates from multiple banks.

Conclusion

Understanding interest calculations empowers you to negotiate better terms. Use our EMI Calculator to compare different loan scenarios.

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Written by SolutionsNepal Team

Financial analysts and Nepal tax experts