MOTOR VEHICLE FINANCING &

PERSONAL FINANCING
 GROUP MEMBERS

NURUL AINA SHAMIMI BINTI NOR ZAHIERUL HAQIMMY BIN

MOHD NAZRI MOHD SHUHAIMMY
(2021601966) (2021881788)
 WHAT IS IJARAH?
Ijarah is a concept used in Islamic commerce. Ijarah
denotes a contract where one party transfers the right
to use an item he owns to another party for a
specified period in exchange for an agreed
consideration. Thus, Ijarah is often called 'Islamic
leasing'. However, this appellation is misleading
because Ijarah may also be used for non-leasing
arrangements such as employment.
FUNDAMENTAL ELEMENTS OF
AN IJARAH CONTRACT

The contracting parties

An offer and acceptance
The subject matter of the contract
Consideration
 CONVENTIONAL LEASING VS IJARAH
Conventional lease IJarah

Lease, Lessor, Lessee Terminology Ijarah, Aajir, Ajir

Starts from the date of Starts when asset is

agreement Rent delivered to customer

Money is given as loan Asset is bought on behalf

Mode of customer

Interest is charged on Profit Rent is charged as share

loan amount of the bank in the asset
IJARAH FINANCING COMPUTATION
FINANCING AMOUNT: RM60,000
RATE OF PROFIT: 6%
TENURE: 7 YEARS

1. Total lease rental=

FINANCING AMOUNT + (FA × 3. Amount of Profit=TOTAL
3. Amount of Profit=TOTAL
PROFIT × TENURE) LEASE RENTAL - FA
LEASE RENTAL - FA
= RM60,000 + (RM60,000 × 6% × 7 years)
= RM85,200-RM60,000
= RM85,200
= RM25,200
2. Monthly lease= TOTAL
LEASE / TENURE
= RM85,200/ (7×12)
= RM1,014.29
AL-IJARAH THUMMA AL-BAI
(AITAB)
An Islamic Motor Vehicle Financing plan which is in
compliance with Syariah principles.

Ijarah (lease/rent)

Bai (sale)
 4. Rent/lease to the customer

BANK CUSTOMER
5. Customer pay for
the installment

2. Get the financing

3. Buy the vehicle

1. Identify the vehicle

VEHICLE
CHALLENGES IN
IMPLEMENTING
Fierce competition Vehicle price manipulation and
between Islamic influence of sales
AITAB
financial institutions representatives

Awareness and
understanding in a
Business operation
community is low structure
 AITAB VS CONVENTIONAL
HIRE PURCHASE
AITAB Conventional HP
1. Number of Comprise two separate Use single contract
contracts contract 'ijarah' and 'al-bai' covering both rental and
sale aspects
2. Contract Considered as a financing Considered as a loan to
terms to the customer the customer

3. Source of sourced from halal funds No restriction on

sourcing of fund

4. Insurance using takaful using conventional

list of bank profit rate:
PERSONAL FINANCING

BAI’AL-‘INAH

BAY‘AL-TAWARRUQ

RAHN
 WHAT IS PERSONAL
FINANCING?

Personal finance refers to money

management, as well as saving and
investing,budgeting, banking,
insurance, mortgages, investments,
and retirement, tax, and estate
planning are all included.
Personal finance includes
evaluating your income, financial
demands, and expenses and
allocating money accordingly.
 WHAT IS BAI'AL-'INAH
Bay‘ is sale, which carries meaning buy goods whose price has been determined by the
seller. In these transactions, the seller sells an asset to the buyer on cash basis and then buys
back the asset at a deferred price which is higher than the cash sale price.

While al-'inah comes from the Arabic word al-'ain, which means cash

Refer to a contract which involves sale and buy back transactions of an asset by
the seller

Bai'al-'inah transactions are divided into two namely:

First Transaction: The bank will sell assets (the land owned by the bank or other assets
advised by the Bank) to the customer at a price sales that will be paid on a deferred basis.
=amount+(amount X profit rate X year) / month
Second Transaction: The bank will subsequently buy back the asset from the customer in
cash
 CONDITION
The ruled Bay' al-Inah is acceptable subject to the following conditions:

The mechanism practised is acceptable to the shafi'i school

The transacted item is not a ribawi item(goods that are not consonance with
figh rules with respect to cash or items sold by weight und/or measure)

The buyer must receive (take possession) the good before selling it back to
the original seller
MODUS OPERANDI
 WHAT IS BAY'AL-TAWARRUQ
From a language point of view, tawarruq is said to come from the Arabic word
warq or wariq or waraqa, which means silver money, dirham or silver meta
Tawarruq technically is the purchasing of a commodity on credit by the
mutawarriq (seeker of cash) and selling it to a person other than the initial
seller (3rd party) for a lower price on cash
Bay'al-tawarruq is the sale and purchase of commodities involving three
parties
There is some typical Islamic financial products constructed on tawarruq are
listed below:
Commodity murabahah deposit facility and placement
Personal financing
Asset financing
 SUPPLIER A SUPPLIER B

COMMODITIES

COMMODITIES
SALE SALE (3RD
(1ST SALE)
PRICE PRICE SALE)
(2ND SALE)
COMMODITIES

ABC CUSTOMER

SALE
PRICE
THE DIFFERENCE BETWEEN TAWARRUQ
FARDI AND TAWARRUQ MUNAZZAM
TAWARRUQ FARDI TAWARRUQ MUNAZZAM

1.Seller( muwarriq ) does not play a 1.The first seller (muwarriq) act as
role in selling re commodity representative/agent on behalf of the buyer
in selling return items to get cash

2.Mutawarriq (buyer) receives cash 2.Mutawarriq (buyer) receives cash from

in cash directly from the last buyer first seller.

3.There is no planned transaction 3.There is a possibility that the seller first

between them first seller to last (muwarriq) and the last buyer has make an
buyer. agreement between them first
 WHAT IS AR-RAHN
Ar-Rahnu is basically islamic pawnbroking which means it follows Shariah
principles
Ar-Rahnu scheme means providing short term financing, fast, hassle free and
riba free to the public by pawning his/her jewellery to banks or any pawnshop
as a security

Ar-Rahn is defined as a contract where a pledgor (rahin) pledges a valuable

asset such as gold items as collateral (marhun) to a pledgee (murtahin) in order
to fulfil a pledgor’s debt liability or pecuniary obligation (marhun bih) owing to
the pledgee in the event of default of such pledgor
 CONCEPT OF AR-RAHN
Qardh:
An interest free loan. Generally, the Customer is required to pay only the
principal amount borrowed. Under this product, the Bank will grant loan
to the Customer and the Customer will pledge his/ her gold jewellery as
surety for the said loan. The same amount is to be repaid to the Bank by
the Customer on maturity or on demand

Rahn:
It literally means pledge whereby, a valuable asset will be pledged as
collateral for loan granted. Under this product, gold jewellery serves as
collateral to the loan. In the event of default, the asset pledged will be
auctioned to recover the loss. Any surplus will be returned to the
Customer while the shortfall is to be repaid
Ujrah:
This refers to charge or fee for services provided. Under this product, the Bank
will charge a reasonable safekeeping fee for keeping the gold jewellery in a
safe condition during the loan tenure

Wadiah Yad Amanah:

It refers to an agreement for placement of assets or money to another person
for safekeeping. Under this product, the Bank promises to keep the gold
jewellery in its custody during the loan period and the Bank shall be
responsible to replace the gold jewellery to the Customer should the gold
jewellery goes missing or stolen. If it is not dueto Bank’s negligence, the Bank
is not required to replace the gold jewellery.
ADVANTAGES OF AR RAHN LOANS
1. The Ar Rahnu System Does Not Charge Interest Rates (Usury Element)
Among the main differences between Ar-Rahn and Conventional is the
loan agreement that is linked to a reward and not the mortgage itself.

2. No Fraudulent Elements When Making Scales.

Pawnbrokers also do not need to worry about the frauds that often occur
during the weighing process because in Ar-Rahnu there will not be any
element of fraud during the weighing process.
3. Low Service Charges
Ar-Rahn offers low service charges. All management at Ar-Rahn involves
low costs and risks when compared to Conventional Mortgages

4. Reasonable Payback Period

Ar-Rahnu is also an Islamic Pawnbroker that can be tolerant with its
customers regarding the repayment period of the loan money that has
been borrowed
LIST OF BANK PROFIT RATE
(PERSONAL FINANCING)
 THANKS FOR WATCHING

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