CBSL revises vehicle LTV ratios, tightens credit access for EVs

THE Central Bank has issued a new directive, revising Loan-to-Value (LTV) ratios for vehicle financing, effective 18 July 2025.

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• Removes 90% LTV cap for EVs, aligning EV financing limits with those of conventional vehicles

• Increases LTV for unregistered motor cars from 50% to 60%, three-wheelers from 25% to 50%; improving affordability and supporting consumer demand

• LCBs with greater exposure to EV lending are expected to face tighter credit conditions due to EV LTV cap removal

• CAL says LFCs to benefit from easing in unregistered vehicle segments, but may see strain from reduced LTVs on commercial vehicles, where they hold larger market share

• Predicts commercial vehicle loan flow may decline, impacting LFC asset growth due to segment's larger average loan sizes

Notably, the preferential 90% LTV cap previously applicable to electric vehicles (EVs) has been removed, bringing EVs under the same financing thresholds as conventional vehicles.

The move is expected to tighten credit access for EV purchases, especially impacting lending by Licenced Commercial Banks (LCBs), which have had greater exposure to EV financing.

According to the updated directive, upward revisions in LTV ratios for unregistered motor cars, SUVs, vans and three-wheelers are likely to improve affordability for consumers in these categories.