Vehicle Finance

Vehicle financing that is Shariah-compliant can be obtained at Islamic banks through different arrangements, such as a leasing agreement after a period of which the customer gains ownership, or where the bank sells the vehicle at a mark-up price that is clearly communicated to the customer.

Types of Arrangements

Markup-Sale (Murabaha)

It refers to the sale of a commodity at a disclosed cost-plus-profit price. The markup can either be a percentage of the selling price or a lump sum amount and the sale price cannot be changed.

The contract can be concluded without a prior promise (Ordinary Murabaha) or with a prior promise (Murabaha to Purchase Orderor/Banking Murabaha).

Lease-to-own (Ijarah Muntahiya Bittamleek)

It refers to the ownership of the leased property being transferred to the lessee at the end of the lease term or at any time the lessee wishes to acquire the leased asset on the basis of unilateral promises.

The Islamic Bank may purchase the property either from the same lessee or the market.


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