Car Ijarah is Meezan Bank’s car financing product and is Pakistan’s first Interest-free car financing. It is based on the Islamic financing mode of Ijarah (leasing). This product is ideal for individuals who want to get interest-free financing for acquiring a car.
Car Ijarah works through a car rental agreement, under which the Bank purchases the car and rents it out to the customer for a period of 1 to 5 years, agreed at the time of the contract. Upon completion of the Ijarah period, the vehicle will be sold at a token amount or gifted to the customer.
Key Features
Lowest Up Front Payment
Rental Payment starts after Vehicle Delivery
Quick Processing Time
Tracker will be installed in all vehicles free of installation and monitoring cost
Free accidental death coverage of upto Rs. 400,000
Minimum security deposit as low as 10%*
Meezan Bank will bear W.H.T (With Holding Tax) on purchase of vehicle
Who is Eligible for Car Ijarah?
Salaried Professionals
- Permanent employees : 3 months in current job with a minimum 2 years continuous employment history
- Contractual employees : 6 months in current job with a minimum 3 years continuous employment history.
- Net take home income : In excess of 2 times the monthly rental (inclusive of takaful)
- Spouse’s verifiable income : Clubbed to an extent of 50%.
- In case of other loans, all monthly payments including proposed Ijarah rental combined not to exceed 50% of net / take home income
- Both data check & e-CIB should be clear and must not have current default / overdue at the time of case approval
Businessmen
- Minimum experience : 2 years continuous involvement in current business / industry
- Position : Proprietor, partner or director (In case of partner or director, percentage of sharing / holding will be applied)
- Net take home income : In excess of 2 times the monthly rental (inclusive of takaful)
- Spouse’s verifiable income : Clubbed to an extent of 50%.
- In case of other loans, all monthly payments including proposed Ijarah rental combined not to exceed 50% of net / take home income
- Both data check & e-CIB should be clear and must not have current default / overdue at the time of case approval
Residual Value Ijarah
(For new cars only)
In a regular Ijarah model, the customer does not have to pay any money to the Bank for acquiring the car upon completion of the Ijarah period.
In the Residual Value Ijarah model, the monthly rentals are significantly lower than the regular Ijarah model because here the customer agrees to pay a certain sum to the Bank for acquiring the car upon completion of the Ijarah period. The customer also has the option that instead of paying the Bank and acquiring the car upon completion of the Ijarah period, he can simply return the car to the Bank.
This model enables the customer to take a car on significantly reduced rental. Customer can also, depending on his monthly rental payment ability, get a much higher-value car than he can under the regular Ijarah model.
Special Offer - Residual Value Ijarah with Pak Suzuki Motors
| Vehicles | For Residual Value Ijarah: Suzuki Mehran, Cultus, Swift, Bolan and Wagon-R |
| Period of facility | 3, 4 & 5 years |
| Advance Rent /Security deposit | Minimum 10% of cost of the vehicle Maximum 70% of the cost of the vehicle |
| Residual value (RV) | 3 Years - 5% to 55% 4 Years - 5% to 50% 5 Years - 5% to 50% |
| Processing charges | Rs. 3,000/- |
| Free Accidental Death Coverage | Upto Rs. 400,000/- |
| Rentals frequency | Monthly Rentals payable through post dated cheques or debit instruction |
Premature Termination
If the customer wishes to terminate the Agreement before the agreed period, the customer will have an option to buy the vehicle on the agreed purchase price as mentioned in the Terminal-value schedule forming part of the Ijarah documents. The purchase price takes into consideration the following amounts:
- The principal outstanding as determined by the amortization schedule of the Ijarah contract.
- Residual value amount.
Maturity of RV Ijarah
Upon completion of the Ijarah period and payment of all rentals, Meezan Bank will make the following offers to the customer:
- Purchase Option: Customer will have the option to purchase the vehicle from Meezan Bank at a pre-agreed Residual Value.
- Return Option:Customer will have an option to return the vehicle to Meezan Bank
Car Ijarah Products
- New Car
Choose from a range of new models and be on your way to owning the vehicle of your dreams. - Used Car
In addition to leasing of new cars, Meezan Bank also provides the unique opportunity of leasing second hand, both locally assembled and imported vehicles. This feature is specifically designed as a highly economical option. The Used Car Ijarah facility is made available at a minimum-security deposit as low as 15%. - Imported Car
Car Ijarah is not just available for new and used car financing but also for imported varieties of cars.
Special Offers
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Used Car Financing
Meezan Bank also finances Used Vehicles through Car Ijarah!
In addition to leasing of new cars, Meezan Bank also provides the unique opportunity of leasing second hand, both locally assembled and imported vehicles. This feature is specifically designed as a highly economical option. The Used Car Ijarah facility is made available at a minimum-security deposit as low as 15%.
How is Car Ijarah Shariah-compliant?
Car Ijarah, designed under the supervision of Meezan Banks Shariah Supervisory Board, is unique to car leasing facilities provided by other banks.
Rights & liabilities of Owner v/s User
An Islamic Ijarah is an asset-based contract, i.e. the Lessor should have ownership of the asset during the period of the contract. Under Islamic Shariah, all ownership related rights and liabilities should lie with the owner while all usage-related rights and liabilities should lie with the user.A conventional lease contract does not distinguish between the nature of these liabilities and places all liabilities on the user of the asset, which is contradictory to Islamic Shariah. Under Ijarah, all ownership-related risks lie with the Bank while all usage related risks lie with the user, thus making the Lessor the true owner of the asset and making the income generated through the contract permissible (Halal) for the Bank.
Continuation of lease rentals in case of total loss or theft of vehicle
If the leased vehicle is stolen or completely destroyed, the conventional leasing company continues charging the lease rent till the settlement of the Insurance claim. Under the Islamic system, rent is consideration for usage of the leased asset, and if the asset has been stolen or destroyed, the concept of rental becomes void. As such, in the above-mentioned eventualities, Meezan bank does not charge the lease rental.
Takaful instead of Insurance
Legally (in accordance to Pakistan’s Law and Regulations), it is required for all leasing entities to insure the leased assets. As such, Meezan Bank insures its leased assets. Meezan Bank insures its assets through Takaful only, which is the Islamic product for insurance.
Permissibility for Penalty of Late Payment of Rent under Islamic Shariah
In most contemporary financial leases, an extra monetary amount is charged, in their income, if the rent is not paid on time. This extra amount is the considered as Riba and is Haram. Under Ijarah, the Lessee may be asked to undertake, that if he fails to pay rent on its due date, he will pay certain amount to a charity, which will be administered through the Islamic Bank. For this purpose the bank maintains a charity fund where such amounts may be credited and disbursed for charitable purpose.
How to get a car through Car Ijarah
To apply for Meezan Bank’s Car Ijarah, fill out a customer application form (available at any Branch), attach the required documents and get your financing approved in minimal working time.
Required Documents
- Application form duly filled and signed by the applicant
- Copy of recent pay slip/certificate showing – For Salaried individuals.
- Business Proof - such as bank certificate confirming proprietorship, NTN, business Association letter or tax return etc. is required - For businessman.
- Copy of last six months bank statements
- One recent photograph.
- Specimen Signature card preferably on bank’s prescribed format
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