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    Car Financing

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    Zeeshan Rajput
    Meezan Bank provides car financing through an Islamic leasing model called Ijarah, where the bank purchases the car and rents it to the customer for 3-5 years. This avoids interest and complies with Shariah law. Risks remain with the owner (bank) while use-related risks are with the lessee. Late payments result in donations to a charity fund, not interest charges. Used vehicles can also be leased, starting at a 20% minimum deposit for younger cars.

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    Car Financing

    Uploaded by

    Zeeshan Rajput
    139 views7 pages
    Meezan Bank provides car financing through an Islamic leasing model called Ijarah, where the bank purchases the car and rents it to the customer for 3-5 years. This avoids interest and complies with Shariah law. Risks remain with the owner (bank) while use-related risks are with the lessee. Late payments result in donations to a charity fund, not interest charges. Used vehicles can also be leased, starting at a 20% minimum deposit for younger cars.

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    Meezan Bank provides car financing through an Islamic leasing model called Ijarah, where the bank purchases the car and rents it to the customer for 3-5 years. This avoids interest and complies with Shariah law. Risks remain with the owner (bank) while use-related risks are with the lessee. Late payments result in donations to a charity fund, not interest charges. Used vehicles can also be leased, starting at a 20% minimum deposit for younger cars.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    139 views7 pages

    Car Financing

    Uploaded by

    Zeeshan Rajput
    Meezan Bank provides car financing through an Islamic leasing model called Ijarah, where the bank purchases the car and rents it to the customer for 3-5 years. This avoids interest and complies with Shariah law. Risks remain with the owner (bank) while use-related risks are with the lessee. Late payments result in donations to a charity fund, not interest charges. Used vehicles can also be leased, starting at a 20% minimum deposit for younger cars.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 7

    AL Meezan Bank

    Car Financing
     As a step towards Meezan Bank’s mission to provide a one-stop shop
    for innovative value-added Shariah compliant products, Meezan Bank’s
    Car Ijarah unit provides car financing based on the principles of Ijarah
    and is free of the element of interest.Ijarah means to rent out

     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.

     Meezan Bank’ 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.
    Shariha Compliance
     Car Ijarah, designed under the supervision of Meezan Banks
    Shariah Supervisory Board, is unique to car leasing facilities
    provided by other banks. Rights & liabilities of Owner v/s User
     An Islamic Ijarah is an asset-based contract, i.e. the Lessor should
    have ownership of the asset during the period of the contract.
    Under Islamic Shariah, all ownership related rights and liabilities
    should lie with the owner while all usage-related rights and
    liabilities should lie with the user..
     Under Ijarah, all ownership-related risks lie with the Bank while
    all usage related risks lie with the user, thus making the Lessor the
    true owner of the asset and making the income generated through
    the contract permissible (Halal) for the Bank.
    Permissibility for Penalty of Late
    Payment of Rent under Islamic Shariah

    In most contemporary financial leases, an extra monetary amount


    is charged, in their income, if the rent is not paid on time. This
    extra amount is the considered as Riba and is Haram. Under
    Ijarah, the Lessee may be asked to undertake, that if he fails to pay
    rent on its due date, he will pay certain amount to a charity,
    which will be administered through the Islamic Bank. For this
    purpose the bank maintains a charity fund where such amounts
    may be credited and disbursed for charitable purpose.
    Used Car Financing

    In addition to leasing of new cars, Meezan Bank 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%.
    Used Car Financing

     The second hand car selected should not be more then twice
    registered.
     The vehicle should not be older than 5 years.
     The minimum security deposit for a vehicle up to 2 years of age is
    20%, while minimum security deposit for a vehicle over 2 years
    of age is 30%.
     Second hand vehicles selected should not be worth more than Rs.
    1.5 million and less than Rs. 250,000/-.
    Residual Value of Ijarah

     The value of an asset at the conclusion of the lease term or the


    price at which a fixed asset is expected to be sold at the end of its
    useful life is commonly referred as Residual Value (RV).
     The average car buyer should take some effort to determine the
    estimated value of their new car in the future it would be best to
    know how much your car is worth in the future.

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