Central bank revises maximum LTV ratios for vehicle leasing

New directives revising the maximum loan-to-value (LTV) ratios for credit facilities provided for the purchase or use of motor vehicles were issued by the Central Bank of Sri Lanka.

Signed by Central Bank Governor Dr P Nandalal Weerasinghe, the new orders take effect from today (25), thereby cancelling the previously effective Central Bank Direction No. 03 of 2025.

According to the notification, these new limits apply to all licensed commercial banks, licensed specialised banks, licensed finance companies (LFCs), and registered finance leasing establishments (RFLEs).

Finance leases, hire purchase facilities, and vehicle loans are included in this directive.

Under the new amendment, the maximum LTV limits to be considered when granting vehicle loans and leasing are as follows:

1. 
   

   Registered vehicles used in Sri Lanka for more than one year: The maximum loan amount obtainable for all vehicles registered and used within Sri Lanka for over one year is 60% of the market value of the vehicle.

   
   


2. 
   

   Unregistered vehicles or vehicles registered for less than one year in the country: The maximum loan limit is 60% for commercial vehicles (Categories C1, C, CE, D1, D, DE, G1, G, J, light trucks, and single cabs).

   
   

The maximum loan limit is 40% for motor cars, SUVs, vans, three-wheelers, and other vehicles (Categories B, B1, A1, A).

Determination of vehicle value: The accurate and fair market value of the vehicle must be considered when granting credit facilities, utilising the following methodologies:

Brand new vehicles: The value confirmed by authorised dealers.

Reconditioned vehicles: The value at the time of customs clearance or the invoice value provided by the relevant dealer.

Registered / used vehicles: The valuation provided by a professional valuer.

Additionally, the Central Bank presented special transitional provisions through this announcement to be applied when providing credit facilities for letters of credit (LCs) opened prior to the effective date of this directive.