Ijara

Ijara is an Islamic financing concept similar to leasing. In an Ijara agreement, one party (the lessor) purchases an asset and leases it to another party (the lessee) for a fixed period. The lessee pays rent for using the asset, while the lessor retains ownership. At the end of the lease term, the lessee may have the option to buy the asset. Ijara complies with Islamic law by avoiding interest (riba) and promoting asset-backed financing, ensuring the investment is based on tangible goods or services. It is commonly used for financing real estate, vehicles, and equipment in Sharia-compliant transactions.