Ijarah
الإجارة
Definition
Ijarah is an Islamic leasing contract where the bank purchases an asset and leases it to the customer for a specified period. At the end of the lease, ownership may transfer to the customer (Ijarah Muntahia Bittamleek). Common for vehicle and equipment financing in Saudi Arabia.
Why Ijarah Matters in Saudi Arabia
Saudi Arabia's financial system is built on Islamic banking principles, making Ijarah a fundamental concept for anyone seeking financing, investing, or conducting business in the Kingdom. All Saudi banks operate under Sharia compliance as regulated by SAMA, and understanding these structures helps you choose the right financial products, compare offerings, and make informed decisions about loans, savings, and investments.
Types of Ijarah
- Ijarah (Operating Lease): Bank retains ownership, customer pays rent
- Ijarah Muntahia Bittamleek: Lease with ownership transfer at end
- Ijarah Mawsufah: Forward lease for assets under construction
For vehicle Ijarah calculations, use our Car Loan Calculator.
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