GlossaryCredit
Ijara
Short definition
Lease contract with purchase option in Islamic participative finance, equivalent to conventional leasing.
Detailed definition
Ijara is participative (Islamic) equivalent of leasing. Bank buys asset (car, equipment) and rents to client for agreed period. At maturity, client can buy asset at pre-agreed residual price. Sharia-compliant as operation based on usage (rental) not interest. Tariffs equivalent to conventional leasing (5-6%).
Concrete example
250,000 MAD car via Ijara 5 years: monthly rent 4,200 MAD, final residual price 25,000 MAD. Total 277,000 MAD (equivalent to conventional LOA).
Related terms
Need personalized advice?
Our team helps you understand technical terms and choose the best financial products suited to your situation.
Compare for free