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 7 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.
| Fixed Profit Rates | |||||||
| Financing Tenure | 1 Year | 2 Year | 3 Year | 4 Year | 5 Year | 6 Year | 7 Year |
| For Lien Based | 7.00% | 8.25% | 8.50% | 9.00% | 9.25% | 9.35% | 9.50% |
| For Non Lien Based | 10.25% | 10.25% | 10.75% | 11.00% | 11.25% | 11.35% | 11.50% |
| Above mentioned rates can be revised based on Deposit and PKRV rate at time of disbursement | |||||||
| Variable Profit Rates | |||||||
| For Lien Based | *SBP Floor + 1.0% (*Currently SBP floor is 6%) | ||||||
| For Non Lien Based | 1 Year KIBOR + 1.0% | ||||||
*Above mentioned profit rates are without Takaful and Tracker
| Without Tracker | With Tracker | Value Added Services | |
| EFU | 1.80% | 1.99% | Accidental death Coverage up to PKR 2.5 Million |
| 1.80% | 1.99% | ||
| Adamjee | 1.50% | 1.99% | - |
| 2.90% | 3.50% |
- Accidental death Coverage up to PKR 2.5 Million - Health insurance plan up to 20.00% of vehicle or PKR 500,000 whichever is less - Online Medical consultancy - Travel Takaful Plan up to USD 50,000 |
Note: In line with State Bank of Pakistan's regulatory requirement, negative history (i.e. overdue/ late payment/ write-off/ waiver) of consumer/individual customers will be reflected in e-CIB reports for two years after settlement.
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.
| Vehicles | For Residual Value Ijarah: Suzuki, Toyota & Honda |
| Period of facility | 1, 2, 3, 4, 5, 6 & 7 years |
| Advance Rent /Security deposit | Minimum 15% of the cost of the vehicle (Only for Locally Assembled Vehicles) Maximum 50% of the cost of the vehicle |
| Residual value (RV) | 1 Years - 60% 2 Years - 60% 3 Years - 50% 4 Years - 50% 5 Years - 40% 6 Years - 35% 7 Years - 30% |
| Up - Front | Rs. 2,500/- Plus FED |
| Documentation Charges | At actual |
| Rentals frequency | Monthly Rentals payable through post dated cheques or debit instruction |
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:
Upon completion of the Ijarah period and payment of all rentals, customer will have a option to purchase a car.
* New locally assembled cars i.e. Toyota, Honda, Suzuki and KIA are being offered to Roshan Digital Account holders under Meezan 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%.
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.
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.
Note: Process mentioned above is not applicable under Meezan Car Ijarah for Roshan Digital Account holders
Attach the required documents and submit your application
Get your financing approved in a 1-7 working days
| Type of Charges | Salaried | Businessmen |
|---|---|---|
| Processing Charges** - Up Front | PKR 2,500 | PKR 2,500 |
| FED* on Processing Charges @ 13% to 16% | PKR [email protected]% | PKR 325 |
| Income Estimation Charges | Not Applicable | At Actual |
| Documentation Charges | At Actual | At Actual |
| Old Vehicle Valuation Charges | PKR 2,000 | PKR 2,000 |
*FED on Processing Charges 13% to 16% vary from Region Wise
**Processing charges are non-refundable
Note: Charges mentioned above are not applicable under Meezan Car Ijarah for Roshan Digital Account holders
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