How EMI is Calculated in Nepal?
Most commercial banks in Nepal (such as Nabil, Global IME, and NIC Asia) use the Monthly Reducing Balance Method. In this method, interest is calculated every month on the outstanding loan balance. As you pay your EMI, the principal portion of your loan reduces, and consequently, the interest amount for the next month also decreases.
Key Factors Affecting Your Loan EMI
- Base Rate & Premium: Nepali banks usually charge an interest rate as
Base Rate + Premium %. Always check the latest monthly base rates on BankingFeeds before applying. - Loan Tenure: Home loans in Nepal typically go up to 30 years, while auto loans usually cap at 7 years.
- Processing Fees: Don’t forget to account for the 0.25% to 1% processing fee usually charged by banks.
Pro Tip: If you have extra cash, making a “Partial Pre-payment” can significantly reduce your total interest and tenure, as most Nepali banks now allow this with minimal charges for individual borrowers.