Ijara
Ijara is an agreement whereby the Bank leases moveable or immovable property to you with an option to purchase the item at the end of the lease period at a pre -agreed price.
Ijara is further divided into:
| I. | Operating Ijara (Operating Lease) |
| II. | Ijara-wa-iqtina'a (Finance Lease) |
Under Operating Ijara
the Bank already owns or acquires assets that can be leased to you for a specific rental amount for a certain period of time as initially agreed upon. On termination of the lease these assets are returned to the Bank. You can benefit from this Operating Lease by meeting your asset requirements and objectives and at the same time not incurring large capital expenditures.
Areas of Application:
The Operating Lease transactions are suitable for expensive assets such as ships, aircraft, and heavy-duty industrial and agricultural equipment.
Under Ijara-wa-iqtina'a (Finance Lease)
you are given the option of ultimate purchasing and owning the asset at the end of the lease period. The Bank acquires assets that can be leased to you at an agreed rental amount for a specific period of time. At the end of the lease period, ownership of the asset is transferred to you by either of the following methods:
| The asset is granted to you after the last rental installment has been paid. |
| The asset is sold to you at the end of the lease period for a nominal price after paying the last rental installment. |
You can benefit from Ijara-wa-iqtina'a by enjoying the possession and use of the asset during the lease period and at the same time you are guaranteed ownership of the asset at the end of the lease period.
Areas of Application:
The Finance Lease is widely used in real estate, computers, machinery and equipment.
