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Ijara

Ijara is an Islamic leasing arrangement. The bank purchases the asset and leases it to you over a specified period. At the end of the lease, ownership may transfer to you through a separate gift or sale contract.

Key Features

  • Flexible lease terms with fixed or variable payments
  • Bank retains ownership during the lease period
  • Bank handles major maintenance and insurance
  • Option to purchase the asset at the end of the lease
  • Potential tax advantages as lease payments may be deductible

Best Suited For

  • Vehicles and machinery
  • Construction equipment
  • Long-term assets with high value
  • Assets requiring maintenance

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Example Scenario

You need a truck worth $60,000. The bank purchases it and leases it to you for $1,200 monthly for 5 years, with an option to purchase for $5,000 at the end of the lease period.

Murabaha​

Murabaha is a cost-plus financing arrangement where the bank purchases the asset and sells it to you at a markup. The markup is a fixed amount agreed upon at the start of the contract, not dependent on time.

Key Features

  • Fixed price and payment schedule known upfront
  • No interest charges, only a fixed profit margin
  • Asset serves as collateral until fully paid
  • Ownership transfers to you at the beginning of the contract
  • Fixed repayment period with no variable rates

Best Suited For

  • Vehicles
  • Building materials purchase
  • Fixed assets with clear specifications
  • Short to medium term financing needs

Need Help Deciding?

Our Sharia finance experts are available to help you choose the right financing option for your specific needs.

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Example Scenario

You need cement worth $10,000. The bank purchases it for $10,000 and sells it to you for $11,200 to be paid in 12 monthly installments of $933.33.

Istisna'a

Istisna’a is a financing method specifically for manufacturing or construction projects. It allows payment before the asset exists, with clear specifications and delivery details agreed upfront.

Key Features

  • Can finance non-existent assets (to be constructed/manufactured)
  • Flexible payment structure (advance, installments, or deferred)
  • Detailed specifications agreed upon before contract signing
  • Suitable for complex, long-term projects
  • Can include penalties for delay or non-conformity

Best Suited For

  • Construction projects
  • Custom manufacturing
  • Infrastructure development
  • Projects requiring staged deliveries

Need Help Deciding?

Our Sharia finance experts are available to help you choose the right financing option for your specific needs.

Contact an Advisor

Example Scenario

You need to construct a warehouse that will cost $200,000. The bank finances the construction in stages based on completion milestones, with a 15% profit margin paid over the construction period plus 3 years.

Musharaka

Musharaka is a partnership arrangement where both you and the bank contribute capital for the asset purchase. Profits are shared according to an agreed ratio, while losses are shared in proportion to capital contribution.

Key Features

  • Shared ownership and risk between you and the bank
  • Profit sharing based on agreed ratios
  • Loss sharing based on capital contribution
  • Gradually purchase the bank's share (diminishing Musharaka)
  • Greater flexibility but requires more detailed agreement

Best Suited For

  • Large construction projects
  • Business equipment and machinery
  • Joint ventures and partnerships
  • Projects with ongoing revenue potential

Need Help Deciding?

Our Sharia finance experts are available to help you choose the right financing option for your specific needs.

Contact an Advisor

Example Scenario

For a $100,000 construction equipment purchase, you contribute $30,000 and the bank contributes $70,000. You gradually buy out the bank's share over 5 years while sharing profits from the equipment's usage.

Islamic Finance Principles

Our financing solutions adhere to core Islamic finance principles, ensuring ethical and Sharia-compliant transactions.

No Interest (Riba)

All our financing arrangements avoid interest-based transactions, instead using profit-sharing or fee-based structures.

Ethical Investment

We only finance assets and projects that comply with Islamic ethical standards, avoiding harmful industries.

Asset-Backed Financing

Our financing is tied to real assets, ensuring tangible value and avoiding speculation or uncertainty.

Risk Sharing

We believe in fair distribution of risk between parties, ensuring balanced and equitable transactions.

Transparency

All our agreements are clear and transparent, with full disclosure of terms, costs, and profit margins.

Value Creation

Every financial transaction must be linked to productive economic activity. Earning profit is only permissible when value is created through legitimate trade or services.