Vehicle, Car & Asset Finance
Ijarah Thuma'Albai
Do you hold an ABN and are registered for GST? We offer Sharia-compliant financing solutions to help you acquire the business vehicles and equipment you need.
What is Ijarah Vehicle and Business Equipment Asset Finance ?
Our Islamic car & vehicle finance solutions are designed to help Muslim customers finance their business cars and equipment while remaining compliant with Sharia principles. This approach allows you to access the resources you need without entering into interest-based contracts, ensuring your financial activities align with your faith. We do this via our Ijarah Thuma Albai financing structure which is rental based.
Who is Eligible to Apply?
Our Ijarah Finance and Rental Agreements are tailored for self-employed individuals who have held a valid ABN (Australian Business Number) for 1 year or more. These solutions are specifically designed for business purposes to help you finance business assets essential for your daily operations. This product is exclusively available to self-employed customers operating under the following structures:
- Sole Trader
- Partnership
- Company
- Trust-type Structures
What Type of Assets and Equipment can be Financed?
Elevate your business with our Islamic-compliant finance rental agreements, designed to help you acquire essential assets such as:
- Motor Vehicles
- Utes & Work Vans
- Trucks & Truck attachments
- Cranes
- Construction Equipment
- Earth Moving Equipment
- Plant Equipment
- Production Machinery
- Business Equipment
- Office Equipment
- Farming Machinery
- Medical Equipment
- Medical Fit Outs
- & much more!
What You Need to Know
What is Ijarah Thuma Al Bai?
Is Ijarah Thuma Albai
an acceptable form of Islamic Finance?
Ownership and Buyout Details
What is the difference between an Ijarah Financing Agreement and a conventional interest-based loan?
Our Ijarah approach aligns with the Islamic principle of a trade-based arrangement which involves an asset being purchased by the financier and then the customer pays Rent to use the Asset. In this case, the subject matter becomes the Asset. At any time during the financing term, the customer(lessee) can make an offer to buy (Albai) the asset from the financier(lessor). Payments are made as Rental (Ijarah) payments throughout the term and the index rate is clearly described as a Rental Rate which is recognised under Australian Law & Sharia. This arrangement is a trade-based structure as money is paid to exchange for goods or services as permitted under sharia-based financing structures.
A conventional finance agreement involving vehicles, cars, or equipment is known as a Chattel Mortgage or Equipment Loan. This is strictly an interest-based loan agreement where money is lent and borrowed on interest between the lender and the borrower. Within this type of agreement, the subject matter is about Money mark up. Payments within this type of agreement are known as principal & interest with an interest rate index. This is otherwise known as an extra money for money arrangement where money is exchanged in unequal terms which is a forbidden way to finance under sharia as it’s a true form of Riba (Usury).
‘Allah has permitted trade and forbidden usury.’ Quran 2:275
Frequently Asked Questions
1. Will my monthly rental payment change within the finance term of this agreement?
No, your monthly payments are a fixed amount throughout the term.
2. Will RBA cash rate changes affect my monthly payments?
No. Our financing agreement does not fluctuate with RBA changes throughout the term ensuring compliance to the strictest principles of sharia.
3. Will I ever get charged interest in any way throughout this agreement?
This agreement does NOT CHARGE ANY INTEREST and is strictly based on rental-to-buy principles. No interest will be charged throughout the term. The Agreements are either Hire Purchase or Leasing Agreements.
4. Will I be charged GST on my monthly payments?
Your monthly payment will be + GST if it is a Rental or Leasing facility. Alternatively, if you facility is a Hire Purchase, there will be no GST on the payments.
The best structure to suite your needs is best discussed with our qualified finance representatives or with your accountant.
5. When purchasing the equipment, who will actually buy the asset?
The customer will seek the desired vehicle or equipment, but the funder will acquire the asset on behalf of the customer and hold legal title until final payment or buyout has been completed by the customer. The tax invoice on purchase will be made out to the financier, but the equipment will be delivered to the customer for their full use.
6. Who will be responsible for taking care of the equipment during the financing term?
The customer will assume full control and responsibilities taking care of the vehicle or equipment during the financing term including restorations, repairs, maintenance and warranty issues as if he was the full owner. It is further understood that the payment has been set at a fair level that enables the customer to make both payments and upkeep of the equipment in a safe, functional and registrable state where required.
7. Will I need to take out insurance on the vehicles or equipment?
You will be required to take out insurance on the equipment, with our fund noted as an interested party on the insurance certificate.
8. Are there some industries or stock items that we can-not finance?
We are unable to finance cars for Uber or Ride Share vehicles, laser hair removal machines (except for Medical Doctors or specialist Skin Clinics), and gym equipment.
9. If I have an existing interest based loan on my vehicles or business equipment, can I refinance to Ijarah Thuma Albai?
Yes, we can refinance your existing interest based loans to our Ijarah Thumma Albai and make your structure sharia compliant.
10. Can I do a sale and lease on a vehicle or equipment to free up cash to reinvest in my business?
Yes, we are able to do sale and lease back using existing assets owned by the business. We are even able to do equity releases against many business assets.
11. Do I need to have a balloon or residual with Ijarah Thuma Albai?
There is no balloon or residual payment required with our Sharia Compliant Car and Equipment finance facility unless the product is required to have one as designated under ATO guidelines.
12. Is a conventional bank lease that one gets off a bank the same as Ijarah Thuma Albai?
NO. A conventional bank Lease or other types of Rental or HP agreements are are NOT Sharia compliant. Many of these conventional leases have interest clauses and display interest rates within them, and other non Sharia compliant aspects to them.
13. If I am not self-employed and work as an employee for a company under a salary arrangement, can I get car or equipment finance with Ijarah Finance for this product?
Unfortunately, we can ONLY finance for self-employed customers who have an ABN which is trading. We are endeavoring to have a consumer finance product in January 2025 to meet this additional demand Insha’Allah.
14. Who has designed this product?
We at Ijarah Finance, have designed this product for our Muslim customers who want sharia compliant vehicle and equipment finance for business purposes. This product has considered all matters that are important to Muslims to avoid Riba and base their business relationships on trade-based arrangements which are acceptable.
15. Has this product been certified as Sharia compliant?
Our product is 100% Sharia compliant and has been certified by internationally recognised board known as FSAC (Financial Sharia Advisory Consultancy). Click here to view our Sharia certificate.
If you are looking to acquire business vehicles and equipment without compromising on your faith based Islamic duties, then our Ijarah Thuma Albai financing agreement certainly meets this requirement. Our team has spent 5 years developing this product and we are proud to be the first Islamic finance provider to have a product to meet this growing demand by the Australian Muslim community.
Apply online and one of our experienced consultants will contact you.