Ijarah Finance proudly offers Muslim’s Shariah-compliant financing options for properties, superannuations, vehicles and more.
Our Islamic car finance in Australia has been certified by the internationally recognised Financial Shariah Advisory and Consultancy.
This is because our financial products adhere to Islamic principles, which prohibit the charging or earning of interest. Money lending, with interest, is referred to as “riba” in Islam. Another term commonly used for this is “usury.”
Riba is prohibited in Islam because it is considered to be exploitative and detrimental to the wellbeing of individuals in need and destructive to society at large.
What Does Islam Teach About Riba?
The Qur’an has several key teachings and harsh warnings about riba. Several of them, such as Surah Al-Baqarah (2:278-279), Surah Al Imran (3:130) and Surah An-Nisa (4:161), warn of the evils of riba. Surah Al-Baqarah (2:275) is most notable.
Several Hadith and Sunnah teachings, such as Sahih Muslim and Sahih Bukhari, reiterate these sentiments, emphasising the importance of abstaining from riba at all costs.
Ijarah FInance’s Shariah-Compliant Car Financing Options
Since charging or earning interest is completely out of the question for Muslims, how can one acquire the financing necessary to purchase assets such as commercial vehicles?
Instead of lending you the money to buy the vehicle and then charging you interest on that loan the way traditional western banks do, we purchase the vehicle outright and rent it to you on a rent-to-own basis.
This means that you possess the vehicle without needing to borrow any money. Rather, you legitimately rent the vehicle from us and, when you’re ready to purchase it fully, you can.
Every rental payment is made up of two key components: the rental cost and the equity. At the end of the lease period, you can take advantage of the equity that has built up over the rental period and lay down the outstanding amount to purchase the vehicle.
Currently, our Islamic car finance in Australia is only available to businesses or self-employed individuals who have a valid Australian Business Number. We hope to make this financing option available to private individuals as well soon. Contact us today for more information or apply online here.
FREQUENTLY ASKED QUESTIONS
What is Car Ijarah?
It’s important to know it’s not a loan at all; it’s a lease-to-own plan. With a loan, the car is just security for the debt you owe. With an Ijarah, we actually purchase the car, making us the legal owner. You then make regular payments to use it and buy our share over time. It’s a partnership built around the car itself, making it completely Halal.
How does Halal car finance work?
It’s a simple, practical process: You find the car you want at the dealership and we purchase it. You get to drive it and use it as your own while you make regular payments. Each payment is split into two parts: a rental portion for using our share of the car and a purchase portion that buys more of our share. At the end of the term, the ownership is transferred to you.
Is it haram to buy a car on finance?
No, as long as it’s the right kind of finance. Any agreement involving interest (Riba) is not permissible because it’s a loan. But our Ijarah model is an interest-free, asset-based agreement based on trade and you can explore our interest-free vehicle plans to see how it’s structured.
Is a novated lease is Halal?
The answer depends on the contract’s fine print. Many novated leases in Australia are just conventional loans packaged differently, which means they include interest charges. A true Halal lease must be an Ijarah, where the financier owns the asset and there is no interest. It’s always best to check the underlying structure for any mention of interest or loan terms.
How do I know if a car finance plan is really Halal?
The best way to be sure is to confirm the provider is overseen by an independent board of Islamic scholars who approve the entire process, from the legal contracts to the source of funds and the payment structure. We are proud of our process and for full transparency, we invite you to meet the Shariah advisors who approve our products.
Can I use this for my business ute or van?
Absolutely. Our Halal finance options are available for businesses and self-employed individuals who need a vehicle or asset for work, such as a ute, van or even specific equipment. The principles are the same: it’s an interest-free, lease-to-own agreement. If you’re ready to get a vehicle for your business the Halal way, we make it easy to get your business on the road.