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    Results 1 to 8 of 8
    1. #1
      MKF
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      I am in possession of a Car Ijara Document from Meezan Bank which claims to have their Car lease interest free and Shariah Compliant certified by Maulana Taqqi Usmani. Some body please explain me the difference between their Arabic sounding Ijarah and Car lease by other banks.

      Meezan bank gives you car for 20% security (another name for down payment) and gives you car on monthly rent almost comparable in amount to interest being charged by other banks (instead of instalments as rent is allowed in Islam). After 3-5 years, whenever the term completes, car is gifted to you while your security deposit is forfeited (or the car is sold to you at the security deposit price). Now someone please tell me, where do you pay rent and get guaranteed ownership of the property after a fixed tenure. There are few other obscure differences regarding ownership of car, status of monthly instalments etc etc but they are more of playing with words than having any real value.

      This seems to me as a case of “Halala” of interest. Just play with words and use some arcane Arabic terminology like Mudaraba and Ijarah etc etc and viola, you are certified Shariah compliant. And you always get some maulvi to give a fatwa in your favour in exchange of some pay/ emolument. I wonder how much Maulana is being paid by the bank to be its Sharia advisor?
      All The Best

    2. #2
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      I have been trying to understand islamic/halal mortgage and it is kind of similar.

      From what I have read so far there are 3 ways and one of the way is to pay rent and an amount towards the purchase.
      Now it sounds that it is the same interest that is being called rent but since i read it at multiple places approved by different scholars, I tend to think it may be right.
      I have also read that if lets say bank owns a property (car) it can sell it to a person at a higher price just like a merchant can sell his mechandise at whatever price he decides and take the extra amount as profit.

      The complicated thing is about ownership. I think that the person cannot be sole owner of the car or property as long as he/she is renting.
      I may be wrong in my understanding so may be someone can correct me.
      I am not saying that whatever you read is shariah compliant and I am no scholar to judge it but I would do my research before completing outruling it as unislamic.

    3. #3
      Darbaan
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      MKF,what alternative would you suggest ?
      Fools never disagree.

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      The final product is same.....but the back end is different according to islamic banks...

      although pricing mechanisms are based on Market Interest Rates, yet the mechanisms of profit/pricing is islamic....its not pure islamic...but i still think its better than pure conventional interest.....even if its 1% islamic (in substance)..

      personally i think meezan bank is one of the better options since they don't have a conventional banking business (unlike others which open an islamic window to fool you)..

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      psyah's Avatar
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      The alternative brother Mirch ... is to make loans something that we do out of charity not for business ...
      The Prophet(SAW) said:
      "I am leaving you two things and you will never go astray as long as you cling to them -- they are the Book of Allah and my Sunnah." [Reported by Al- Haakim - Sahih].

    6. #6
      قادمون يا الاقصى
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      bao bihari's Avatar
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      Quote Originally Posted by MKF View Post
      I am in possession of a Car Ijara Document from Meezan Bank which claims to have their Car lease interest free and Shariah Compliant certified by Maulana Taqqi Usmani. Some body please explain me the difference between their Arabic sounding Ijarah and Car lease by other banks.
      The difference is in the risk and the application.

      Same end results is what you get in nikah/Zina --- Slaughter/killing of animal non islamic way etc so the difference is in the method not in the end result.

      This is same is what kuffar used to say that Bai(Sale purchase) is equal to RIBA , but ALLAH explicitly stated in quran that ALLAH has made riba haram and bai halal.

      Main difference between ijarah and lease is that of ownership, and thus risk. Risk and ownership in ijarah is with the bank , which mean that if the car is totaly damaged in first day of ijarah then the customer would not pay any thing and his security deposit (which infact is advance rental) will be paid back to him. This is what actualy happens and might have also happend in the branch where you are seeking financing from. Just ask the RM.



      Quote Originally Posted by MKF View Post
      Meezan bank gives you car for 20% security (another name for down payment) and gives you car on monthly rent almost comparable in amount to interest being charged by other banks (instead of instalments as rent is allowed in Islam). After 3-5 years, whenever the term completes, car is gifted to you while your security deposit is forfeited (or the car is sold to you at the security deposit price). Now someone please tell me, where do you pay rent and get guaranteed ownership of the property after a fixed tenure. There are few other obscure differences regarding ownership of car, status of monthly instalments etc etc but they are more of playing with words than having any real value.
      These are the actual differences, i believe that you must have read through different material on ijarah @ meezan bank website .

      There is no security deposit rather advance rental is taken which is adjusted in next months. If due to any reason the ijarah is terminated then you will be returned part of unused ijarah rentals.

      Quote Originally Posted by MKF View Post
      This seems to me as a case of “Halala” of interest. Just play with words and use some arcane Arabic terminology like Mudaraba and Ijarah etc etc and viola, you are certified Shariah compliant. And you always get some maulvi to give a fatwa in your favour in exchange of some pay/ emolument. I wonder how much Maulana is being paid by the bank to be its Sharia advisor?

      Mufti Taqi usmani do not get any amount from meezan bank, he is in shariah supervisory board and oversees shariah compliance in the same way directors of a bank monitor its progress.

      I request you not to make such remarks against scholars of his calibre.

      If you have further queries PM me and we can discuss this on phone as well as i am pretty related with such business.



      Last edited by bao bihari; Dec 7th, 2010 at 07:36 AM.
      لا عيش إلا عيش الآخرة
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    7. #7
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      Peace bao bihari

      How is ijara different to this?

      I get a car rental for 2 years. The car price is £20,000. I agree to rent the car with negotiation at £400 per month. In order to rent the car I need to pay 3 months rent in advance, which comes to £1200.

      At the end of the 2 year period I have paid £10,800 of which (£1200) will be reimbursed to me.

      In those 2 years the value of the car has dropped to £9,500. I didn't want to buy the vehicle and got my money back.

      How would ijara be different to this and if it is no different then why do we call it ijara? It is simply rental hire. Furthermore if it is no different to 'rental' methods then why do we call it "Islamic" surely we should call it "halal".
      The difference to me is important here ... Islamic means something above and beyond what is acceptable or permissible it is something desirable and even obligatory.

      If ijara is different i.e. that the person renting the car has to purchase the car afterwards at some agreed inflated price then this to me is rib'a.
      Last edited by psyah; Dec 7th, 2010 at 02:21 PM.
      The Prophet(SAW) said:
      "I am leaving you two things and you will never go astray as long as you cling to them -- they are the Book of Allah and my Sunnah." [Reported by Al- Haakim - Sahih].

    8. #8
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      Another thing bao bihari

      rib'a is like trade, but there is not 'risk' that differentiates them. 'Risk' is what differentiates Lease from Ijara, but risk has nothing to do with typical rib'a.

      If I lend someone some money and expect it back on day 20 and charge 1% on each day late there is no concept in the formula provided that equates to a risk differential. Rather the counter to the rule against rib'a arose as a result of people saying that in trade we put an amount above cost price so why can't we do the same with returning borrowed goods?

      The reason why is because of these factors in trade:

      > The agreed value of the item at that moment
      > Both parties agree to that value - in the mind of the seller and the buyer the item value will have a range somewhere the two expected values will coincide and that becomes the agreed price/value of the good.
      > The overall amount of money to be paid will not exceed the value of the item.

      Once these are in place we have a contract

      If a loan is granted by the seller then it should be on agreed price as per contract ... to charge extra on the basis that it is a loan is called rib'a. Hence Islamic loans have to be on charitable grounds.

      On the other hand if we have a smarty pants who says let's work out what the calculated/estimated total will be for an interest inclusive payment for a number of months, total this and put this amount on our sell price, then portion the loan repayments accordingly, then we can get the same money as though the item was being sold with interest.

      The problem being that if I offered to pay the sum at once I would get a discount, and if I agreed on that discounted price then wanted to pay in instalments I would be disallowed and would have to pay either larger total amount by installment or a smaller amount if paid altogether - this is still interest, since the basis for the extra charge is the delay in getting the full amount.

      Some clever establishments buy houses at market purchase rate then sell on to others at higher prices still. The problem is that they will not buy unless they get agreement that the end/purchaser first agrees a contract to buy. By binding the end purchaser to such an agreement this would translate to rib'a. The contract of the seller to establishment should be independent from establishment to buyer. The buyer should be able to negotiate a deal to a value that they are happy to pay without it being related to the contract that came before they looked for purchase.

      The deeper insights in all of these methods is the artifical inflation of prices, as a result of rib'a or rib'a work-arounds, is that this is damaging for society and economy.

      The fact that in these times both seller and purchaser can't always "agree price" because that is often determined by market. This is the dust of rib'a no doubt.

      'Risk' has an element of something being halal or haram, but it is not technically what makes rib'a different from trade. I just thought I would mention this.
      The Prophet(SAW) said:
      "I am leaving you two things and you will never go astray as long as you cling to them -- they are the Book of Allah and my Sunnah." [Reported by Al- Haakim - Sahih].