Islamic Leasing

Islamic leasing, known as Ijarah, is a financing arrangement compliant with Shariah law. In this arrangement, the lessor (owner) buys and owns an asset, then leases it to the lessee (user) for a fixed rental period. The lessee uses the asset and makes regular payments, but ownership remains with the lessor unless the lease agreement includes an option to purchase. Ijarah avoids interest, aligning with Islamic principles, and emphasizes asset-backed transactions, risk sharing, and transparency. It’s commonly used for leasing property, vehicles, or equipment in a manner consistent with Islamic ethical and legal standards.