The Central Bank of Sri Lanka has issued new directives tightening vehicle loans for private commercial and passenger vehicles, effective November 8, 2025. The move reduces the loan-to-value (LTV) ratios that banks and finance companies can offer, a development likely to impact both businesses and individual buyers.
Under the new guidelines, the LTV ratio for commercial vehicles has been cut to 70 percent from 80 percent, while motor cars, vans, and SUVs are now limited to 50 percent from 60 percent.
Three-wheelers remain at 50 percent, and credit for all other vehicles has been reduced to 50 percent from the previous 70 percent.
The revised ratios will not apply to vehicles whose letters of credit (LCs) were opened between July 18 and November 8, 2025, with previous provisions remaining for LCs opened before July 18.
Notably, electric vehicles could previously be purchased with loans covering up to 90 percent of their value, but this has now been curtailed under the new regulations.
The decision comes amid concerns over Sri Lanka’s heavily taxed vehicle market, where high duties on commercial vehicles—including passenger vans and three-wheelers—contribute to artificially high transport costs, increased wage pressures, and potential loss of export competitiveness.
Industry analysts warn that the tightened credit may place additional financial strain on businesses relying on commercial vehicles, including exporters and transport operators.
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