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“Car Leasing in Islamic Banks”
Islamic Banking:
Islamic banking refers to a system of banking or banking activity that isconsistent with the principles of Islamic law(
Sharia
) and its practicalapplication through the development of Islamic economics. Sharia prohibitsthe payment of fees for the renting of money (Riba) for specific terms, aswell as investing in businesses that provide goods or services consideredcontrary to its principles (Haraam). While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20thcentury that a number of Islamic banks were formed to apply these principlesto private or semi-private commercial institutions within the Muslimcommunity.
“Islamic Bank’s Leasing”
Islamic banks use term for car leasing called
Ijarah
means lease, rent or wage.Generally, Ijarah concept means selling benefit or use or service for a fixed price or wage.Under this concept, the Bank makes available to the customer the use of service of assets /equipments such as plant, office automation, motor vehicle for a fixed period and price.
:3Major Islamic Banks Offering car Leasing (Ijarah) to Discussin this Project:
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when we visit Meezan Islamic bank’s car Ijarah (Leasing) there we interview autofinance manager main question which were ask to him by 1 of our team member aregiven below:
What is the mechanism of decision making at your department?
Who is here to change products or services?
Who can change the terms and conditions regarding car leasing?
Is this really Islamic way of leasing car or Auto finance?Manager Entertain our answers well and we also take help from bank’s website toget answers regarding our project:
Decision Making:
According to Meezan Banks auto finance manager and their Website their headoffice is situated in Karachi and there are some board of directors who
Conditions regarding car leasing:
CarIjarah, Pakistan’s First Islamic Car Financing
As a step towards Meezan Bank’s mission to provide a one-stop shop for innovative valueadded Shariah compliant products, Meezan Bank’s Car Ijarah unit provides a 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 financingmode of Ijarah (Islamic leasing). This product is ideal for individuals looking for car financing while avoiding an interest-based transaction.Meezan Bank’ Car Ijarah is a car rental agreement, under which the Bank purchases thecar 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 our leasing of new cars, Meezan Bank also provides the unique opportunityof leasing second hand, both locally assembled and imported vehicles. This feature isspecifically designed as a highly economical option. The Used Car Ijarah facility is madeavailable at a minimum-security deposit as low as 20%. Financing of used cars are subjectto aselection criteria. 
Shariah Compliance
Car Ijarah, designed under the supervision of Meezan Banks Shariah Supervisory Board,is uniqe leasing facilities provided by other banks.
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Difference in the Rights & Liabilities of Owner v/s User
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Calculation of lease rentals in case of total loss or theft of vehicle
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Takkaful instead of Insurance
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Permissibility for Penalty of Late Payment of Rent under IslamicShariah
Key Features of Car Ijarah
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Low monthly rental
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Rental paid after delivery, not in advanced
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Fastest processing and delivery
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Tracker option available
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Minimum security deposit as low as 10%
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All new, used, local, imported and luxury vehicles can befinanced
Rental Calculations
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