Islamic loans

Bay – Muajjal:

is a sale in which goods are delivered on the spot and payment of the price is deferred to a later date. Goods are first acquired and possessed by the bank which negotiates with the customer and agrees on a price. Payment may be settled in the future in a lump-sum or by installments.

Bay al – Salam (Future Delivery Sale):

It is a sale in which the price is paid in advance and the delivery of goods is deferred to a later date. It is allowed as an exception to the general rule that no sale can take effect unless the goods are in possession of the seller, provided that the goods are sufficiently defined to avoid uncertainty and the date of delivery is specified.

Istisna:

It’s a contract to sell goods to be manufactured by someone who supplies all necessary inputs. The price can be paid upfront or in installments during or after manufacturing. It is an exception to the general rule that in a sale contract either the payment of the price or the delivery of goods is postponed, but not both. Goods must be sufficiently defined to avoid uncertainty, the date of delivery must be specified and the price is determined.

Ijarah:

It is a sale of usufruct of assets or specific for an agreed rental payment or price. Operating Ijarah involves the sale of asset usufruct. Financial Ijarah or Ijarah Monta hit Bettamleek involves the sale of usufruct and the transfer of assets title to the lessee at the end of Ijarah. Service Ijarah involves the sale of specific services (education, medical treatment, or travel). In all cases, the lessor should be in possession of the assets whose usufruct are to be sold, either through leasing or purchasing, or has pre-agreed with the supplier of services on their sale to third parties.

Mudarabah (Profit Sharing):

It is a partnership agreement between two sides: a capital provider, and an entrepreneur, the capital provider advances capital and the entrepreneur provides expertise, labor, and management. Profits are shared between the two parties according to a predetermined ratio. Financial loss is borne by the capital provider, while the entrepreneur loses his effort. The entrepreneur guarantees the full refund of capital in case of breach of contract or negligence.

Musawamah:

It is a sale in which the price of the commodity to be traded is bargained between the seller and the buyer without any reference to the price paid or cost incurred by the former.

Murabaha to the purchase orderer (Cost plus or markup sale):

A sale in which the buyer offers to purchase a commodity at a price equal to its cost to the seller plus an agreed profit margin. It is a trust or a transparent sale in which the cost of acquiring the goods by the seller must be disclosed. The cost to the seller includes the price he had paid plus all other expenses. Payment of price can be made against the delivery of the goods sold or deferred as lump-sum or installments. Murabaha usually starts with the buyer signing a promise to purchase. The seller then acquires the goods and takes their possession. Finally, the buyer signs the Murabaha sale contract and receives the good in return for payment or an obligation to pay later.

Musharakah (Joint Venture):

It’s a relationship between parties, both of which contribute capital to a business and share in its management. Partners in Musharakah may appoint one or more of them or a third party to carry out the management on their behalf. Profit is divided according to a pre-agreed profit-sharing ratio and loss is shared pro rata.

Qard Hassan (Interest-Free Loan):

This loan is made for charitable purposes. The lender advances the loan at a zero interest rate and the borrower pays only the principal. The lender may end up forgiving all or part of the loan as an additional act of charity.

Sukuk (Asset-Based Financial Instruments):

Sukuk are asset-based financial instruments of equal value that represent titles to common shares in assets (real assets, usufruct or services). There are two ways of issuing Sukuk. First, real assets can be securitized into Sukuk. Once sold, each Sukuk holder becomes the owner of a common share in securitized assets. Second, Sukuk can be sold for the purpose of using the proceeds of their sale to acquire income-earning assets, in which Sukuk holders will own common shares.

Takaful (Islamic Insurance):

Takaful is exercised through the contribution of policyholders to an independent portfolio based on donating their subscriptions and their investment returns to compensate those who suffer from the insured risk. This portfolio is kept separate from the company’s accounts, and the balance belongs only to policyholders. The insurance company administers the insurance operations as an investment agent in return for a fixed fee and invests the portfolio’s fund as a Mudareb in return for a specified share of the profit.

Investment Wakala (Agency):

In investment Wakala a principal appoints an agent to carry out investment activities on his behalf. The principal obtains all profit and bears all losses. The agent received an agreed commission against his efforts. He may also receive a share in the profit as an added incentive.

Home Loan Can Be Used For Many Purposes

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For Construction of a New House

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Purchase of
Dream Home

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Interiors of Home

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Purchase of
Open Land

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Buy an Apartment