Aspect Conventional leasing Islamic leasing (Ijarah)

The leased asset is not The leased asset is owned by the

Leased asset
owned by the leasing bank. leasing bank.

The bank cannot be held

The bank bears the risk of loss if it
Liability for liable for any losses that
is not caused by negligence of the
losses might be incurred on the
lessee.
asset.

Rent is charged and billed No rent (ujrah) can be charged and

Rent
prior to delivery of the billed prior to delivery of the leased
payment
leased asset. asset.

Ijarah is a binding contract and

The agreement gives the
hence neither party can terminate
leasing bank a unilateral
Termination it without mutual consent unless
right to terminate it at its
the contract is breached by either
own discretion.
party.

Penalty on late payment is

Late Penalty on late payment is
considered impermissible and
payment charged.
hence it cannot be charged.

Q2=