Car Ijarah.docx - CAR IJARAH As a step towards Islamic...

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CAR IJARAH As a step towards Islamic Bank’s mission to provide a one-stop shop for innovative value-added Shariah compliant products, Islamic Bank’s Car Ijarah unit provides car financing based on the principles of Ijarah and is free of the element of interest. Car Ijarah is Pakistan’s first Interest Free car financing based on the Islamic financing mode of Ijarah (Islamic leasing). This product is ideal for individuals looking for car financing while avoiding an interest-based transaction. Car Ijarah is a car rental agreement, under which the Bank purchases the car and rents it out to the customer for a period of 3 to 5 years, agreed at the time of the contract. Upon completion of the lease period the customer gets ownership of the car against his initial security deposit. Car Ijarah also features Used Vehicles In addition to leasing of new cars, Banks also provides the unique opportunity of leasing second hand, both locally assembled and imported vehicles. This feature is specifically designed as a highly economical option. The Used Car Ijarah facility is made available at a minimum-security deposit as low as 20%. Financing of used cars are subject to a selection criteria. Key Features of Car Ijarah: Low monthly rental Rental paid after delivery, not in advance Fastest processing and delivery Tracker option available Minimum security deposit as low as 10% All new, used, local, imported and luxury vehicles can be financed Islamic Banking Vs Conventional Banking: The main difference between Islamic and conventional banking is that Islamic teaching says that money itself has no intrinsic value, and forbids people from profiting by lending it, without accepting a level of Risk – in other words, interest (known as "riba") cannot be charged. To make money from money is prohibited – wealth can only be generated through legitimate trade and investment. Any gain relating to this trading is shared between the person providing the capital and the person providing the expertise. At Islamic Bank of Britain, we generate all our profit through sharia’a compliant trading and investment activities. We then share the profits with our customers at a pre-agreed ratio. In order to share profits you must hold one of our savings or investment accounts There are two major differences between Islamic Banking and Conventional Banking: 1
1 . Conventional banking practices are concerned with "elimination of Risk" where as Islamic banks "bear the risk" when involve in any Transaction. 2 . When Conventional banks involve in transaction with consumer they do not take the liability only get the benefit from consumer in form of interest whereas Islamic banks bear all the liability when involve in transaction with consumer. Getting out any benefit without bearing its liability is declared Haram in Islam. While the basics of what the business is the same, the term refers to operating the business within Islamic law. The main thing that effects this business under that law is that Islam prohibits the charging of interest. Certainly a problem in modern banking.

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