Murabahah
المرابحة
Definition
Murabahah is an Islamic finance structure where the bank purchases an asset and resells it to the customer at a disclosed markup (profit margin). It is the most common Sharia-compliant financing method used for home loans, car loans, and personal financing in Saudi Arabia.
Why Murabahah Matters in Saudi Arabia
Saudi Arabia's financial system is built on Islamic banking principles, making Murabahah 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.
How Murabahah Works
- Customer identifies the asset they want (home, car)
- Bank purchases the asset from the seller
- Bank resells to customer at original price + agreed profit margin
- Customer pays in installments over the financing period
Unlike conventional loans, the profit margin is fixed upfront — no variable interest rates. Use our Home Loan Calculator or Car Loan Calculator to estimate monthly installments.
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