A Study On Al Ameen Car Ijarah Commerce Essay

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Al-Ameen Car Ijarah is a Shari'ah compliant car leasing for the customers, Muslims and non-Muslims. Al-Ameen Car Ijarah is an interest free car financing product, which is based on the principles of Ijarah. This car financing product is very much helpful for the people who wants to sell their cars' stock without charging interest and make their profit Halal on Islamic basis. It is also beneficial for those customers who are interested in auto financing and who avoid the inerest-based dealings.

Al-Ameen Car Ijarah is the agreement of lease between the customer and the distributor, in which the contract is signed between both the parties and the distributor rents his car for the period of 2-5years to the customer. The customer will be owner of the car by the end of the time period decided in the contract, as customer paid money to the distributor in terms of advance and the payments in instalments. Ijarah is the sale of definite usufruct of an asset in exchange for a definite reward (rental payment). In Ijarah, the owner of a car(distributor) will not remain owner of that particular car at the end of the agreement. In the eyes of Shari'ah law, the user have all the user related rights and liabilities while the owner has all the ownership rights and the liabilities of an asset. Conflicting to Shari'ah, the normal lease put all types of liabilities in the court of renter and does not differentiate the nature of liabilities. But, Ijarah conract says that all the risk related to ownership is fot the distributor and the risk related of using an asset is with the user. The income for the distributer from the contact is halal by making leasing party the owner of an asset at the end of contract.

Key Features of Al-Ameen Car Ijarah for New Cars:

Ø Advance rent is not required

Ø Easy way to get a new car form a distributor

Ø No payment for insurance required in advance.

Ø Security deposit is 50% maximum

Ø Agreements for used and new cars

Ø Agreements for 3-5years time periods.

Ø 10% - 15% required as minimum security.

Ø Rent in monthly instalments after delivery.

Key Features of Al-Ameen Car Ijarah for Used Cars:

Ø The selected used car must be from its first owner.

Ø The vehicle must not be old more than 5years.

Ø The cars older than 2years have to deposit minimum security of 20% of its age.

Ø And 10% deposit of the age is due on those cars that are older than 3years.

Ø The car must be under 7years old at the time of completing the contact of Ijarah. For example, if the car is 4years old, then the contract of Ijarah must be within four years time.

Al-Ameen Car Ijarah VS Conventional Leasing Features:

Features

Conventional Leasing

Al-Ameen Car Ijarah

Rentals

The bank has only the authority to fluctuate the rent and transaction rates.

The bank is not being able to take a solo decision to fluctuate the rental amount, decided at the time of agreement.

Risk & Ownership

The risk of owner is parked to tenant while the ownership remains to owner.

Here the risk related with the ownership, remains with the owner.

For example; if a person gets a horse on rent and the horse dies, it will be the loss of the owner.

Expenses

In conventional leasing system, all the risk realted to the ownership, will be beared by the tenant.

For instance; overhead, insurance, accidental repairs etc.

In AL-Ameen Car Ijarah, the risk related to ownership must be beared by the owner and all the risk related by the use of an asset, must be beared by the user or tenant.

Late Payment Charges

If rent is not paid on time so the extra monetary amount is charged this is taken from income of the organization.

This extra amount is Haram which is called Riba.

In Al-Ameen car Ijara.Tenant may be promise that if he fails to pay rent on his due date. So he will pay the certain amount to a charity fund.

This amount is not goes into bank income. So this is not a Riba. Charity is only charged to discipline the customer.

Asset Theft/ Damage

In Conventional leasing are not stopped in any case of theft or damages to the asset.

In the case of asset (car) theft or damage that becomes impracticable rental are stopped because they only obtain for use of the asset.

Rentals / Monthly Payments

In Conventional leasing, the rental starts from the booking date of an asset, ignoring that whether that asset is delivered to the tenant or not?

When the asset delivered to the tenant, the rental start after a month.

Upfront Payments

Initially it is consist of:

minimum 10-15% initial deposits.

1st month rent .

insurance premium of 1st year.

1st installment of second year payment.

registration charges.

In Al-Ameen Car Ijarah, there isn't any upfront charges except the security deposit from 15%-50% of the actual payment by the customer and the cost to process the documents.

At the end

Here, according to the contract, the vehicle will be transferred to the customer automatically by the end of the contract.

Bye the complete theme of Ijarah, the customer has an option to owe the car through the sale deed from the distributor or have an option to return the car to the bank and able to take back his security deposited against the car.

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