Imagine having an auto finance solution that allows you to buy the vehicle you need for your business without engaging in riba. With Ijarah Finance, this does not have to be a pipe dream. Halal auto financing is a reality that you can take advantage of, allowing you to purchase vehicles in a Sharia-compliant manner.
But before you sign up for this kind of financing, it’s important that you’re able to afford it and knowledgeable of what the consequences might be if you can’t meet your obligations.
Let’s take a look at what you need to consider:
Assess Your Finances
You’ll need to do a thorough calculation of your finances to determine whether your income minus expenses allows you to have enough cash left to comfortably manage the monthly payments.
Since the Ijarah Thuma’Albai financing arrangement is tailored for self-employed individuals, you should factor in any business-related costs that may fluctuate, such as fuel, maintenance, or operational costs.
Understand the Terms of Agreement
It’s important that you fully understand how much you’ll be paying over the course of the agreement period to ensure it fits with your budget. Unlike conventional financing, Ijarah Thuma’Albai involves making rental payments rather than interest-based payments. This is done to avoid engaging in riba.
One of the benefits of Ijarah financing is that it is consistent and doesn’t fluctuate as interest rates change. This gives you greater certainty for planning purposes.
Can’t Meet Your Obligations?
Not meeting your payments is considered a breach of agreement – in which case the lease might be terminated and the vehicle repossessed.
What’s important to understand is that the vehicle is still owned by the lender and that you are merely renting it. So if you are unable to meet your obligations, you will simply lose possession of the vehicle and it will be returned to the rightful owner, as you’re not under a debt obligation in the same way as in a conventional loan. Rather, you’re paying for use, not repaying a borrowed amount with interest.
You may also be liable for any unpaid rentals up to the date of repossession and potentially any costs related to repossession, damages to the vehicle beyond normal wear and tear and certain contractually agreed penalties.
If you keep up your end of the bargain, you can purchase the vehicle at the end of the rental agreement.
Get your new vehicle through halal auto financing at affordable rates. Contact us at Ijarah Finance to find out more or apply today.