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Nabin Pradhan

The landscape of auto loans provided by banks and financial institutions is witnessing a consistent downward trend. In comparison to the previous year, the demand for auto loans has significantly decreased, marking a notable shift in the financial dynamics of vehicle purchases. The decrease is not only limited to vehicle purchases but also extends to the demand for auto loans.
As per the recent report from the Nepal Rastra Bank, until Mangsir of the current fiscal year, banks and financial institutions have disbursed a total of NPR 129 billion for vehicle purchases, specifically for auto loans. This amount is considerably lower than the corresponding period of the previous fiscal year, which witnessed a flow of NPR 203.25 billion.
Prominent banks like Development Banks have also been affected, with a loan flow of only NPR 16.25 billion for higher purchases in Mangsir, compared to NPR 20.90 billion during the same period last fiscal year. This downturn is evident when compared to the total loan flow of NPR 49.33 billion for higher purchases in the last fiscal year.
<h4>Reason For the Decline of Auto Loans</h4>
<ul>
<li> &nbsp; Restrictions on the import of vehicles to boost foreign currency reserves.</li>
<li> &nbsp; The Central bank instructed commercial banks to tighten their loan lending policies.</li>
<li> &nbsp; Government policies for reducing funds for auto loans can also be the reason for it.</li>
<li> &nbsp; Higher interest rates have discouraged potential buyers from seeking auto financing.</li>
<li> &nbsp; The ongoing liquidity challenges in the banking sector contribute to the reduced availability of funds for auto loans.</li>
<li> &nbsp; Obtaining an auto loan has become a more intricate process due to the cautious approach of banks.</li>
<li> &nbsp; Decline in the sale of stocked vehicles in the market.</li>
</ul>
In conclusion, the continual decrease in auto loans reflects a combination of factors, including government policies, liquidity challenges, and cautious banking practices. As the market adapts to these changes, potential car buyers might find the process of obtaining an auto loan more challenging than before.

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The Decline in Auto Loans: Analyzing the Trend up to Mangsir

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