What is Ijarah?
An Islamic lease-to-own financing structure with no interest (riba).
In Ijarah, the bank buys an asset and leases it to you for a fixed monthly rental; ownership transfers at the end. It's used for Shariah-compliant car and home finance — the cost is a transparent rental, not interest.
Example
Meezan Car Ijarah finances a vehicle as a lease rather than an interest loan.
How Ijarah works
Ijarah is an Islamic leasing arrangement used instead of an interest-bearing loan. The bank buys the asset — a home, car or equipment — and leases it to you for an agreed rent over a set period. Because you pay rent for use rather than interest on a loan, the structure is compliant with Islamic finance principles.
Ijarah wa iqtina
In the common 'Ijarah wa iqtina' (lease-to-own) variant, ownership of the asset transfers to you at the end of the term, once all rental payments are complete. It is widely offered for home and car finance by Islamic banks alongside Murabaha.