Author Topic: Car Ijarah, Pakistan’s First Islamic Car Financing  (Read 10639 times)

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Car Ijarah, Pakistan’s First Islamic Car Financing
« on: July 13, 2007, 12:16:35 PM »
Car Ijarah, Pakistan’s First Islamic 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 a car financing, based on the principles of Ijarah and is free of the element of interest.   



"Car Ijarah"



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’s 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. Upon completion of the lease period the customer gets ownership of the car against his initial security deposit.

Meezan Bank’s 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. Upon completion of the lease period the customer gets ownership of the car against his initial security deposit.

Car Ijarah is unique and is approved by Meezan Banks Shariah Board
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. A conventional lease contract does not distinguish between the nature of these liabilities and places all liabilities on the user of the asset, contradictory to Islamic Shariah. 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.

 
   
Continuation of lease rentals in case of total loss or theft of vehicle
   If the leased vehicle is stolen or completely destroyed, the conventional leasing company continues charging the lease rent till the settlement of the Insurance claim. Under the Islamic system, rent is consideration for usage of the leased asset, and if the asset has been stolen or destroyed, the concept of rental becomes void. As such, in the above-mentioned eventualities, Meezan bank does not charge the lease rental.

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 purposes.

Key Features of Car Ijarah
   

   Ease of acquiring any new locally assembled car
   No upfront Insurance Payment
   No advance Rental
   Available in tenures of 3, 4 and 5 years
   Minimum security deposit as low as 15%
 



Car Ijarah also features Used Vehicles
   

In addition to our leasing of new cars, Meezan Bank also provides the unique opportunity of leasing second hand, locally assembled, vehicles as well. 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 Selection Criteria
   

   The second hand car selected should be from its first owner.
   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%.

   At the time of termination of the Ijarah agreement, the vehicle should not be more than 8 years old. This means that if a car is 5 years old, the Car Ijarah tenure is not more than 3 years and if its 4 years old, the tenure may be set for a maximum 4 year term.

   This facility is for locally manufactured cars of Suzuki, Toyota, Honda & the new model of Santro only.

   Second hand vehicles selected should not be worth more than Rs. 1 million and less than Rs. 250,000/-. Meezan Bank will have the vehicle valued by an independent valuation company accordingly.
 


Rental Calculations
   

For information on calculation of monthly rentals contact our 24/7 Call center, at 111-331-331 (dial 92-21-111-331-331 from outside Pakistan)

Documentation and Eligibility for Car Ijarah
If you meet the requirments and wish to apply for Car Ijarah, simply fill out an application form and bring the following documents to your nearest Meezan Bank branch.Individuals/Self-Employed Professionals/Businessmen

1   Copy of NIC
2   Two recent passport sized photographs
3   
Recent Utility Bill (Electric/Gas/Water) received at the residential address
4   Last Six Month Bank Statement
5   Last Six Month Bank Statement of Business (for Businessmen)
6   Certified/Original copy of Recent Pay slip (for Salaried Individuals)
7   Copy of Rent Agreement (if applicable)

Apply for Car Ijarah! 
   

To apply for Meezan Banks Car Ijarah: Islamic Car Financing, fill out a customer application form so someone will contact you within 24 hours.

« Last Edit: March 08, 2011, 11:02:37 PM by Admin »

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Car Ijarah, Pakistan’s First Islamic Car Financing
« on: July 13, 2007, 12:16:35 PM »