Get your hands on a Carmoola Gift Box Learn More

Close-vector

Can I Finance My Car With Meezan Bank?

What is car finance with Meezan Bank, and how does it work? If you’re looking for Halal car finance, Meezan Bank may just provide you with precisely that. Meezan Bank offers a car financing product called Car Ijarah. Many car buyers are interested in this car finance because it is interest-free. Meezan Bank uses Ijarah, which is the Islamic mode of leasing. 

If you apply for this type of car finance with the bank, you will enter into a car rental agreement. The bank buys the car, and then you will rent it out from them for one to seven years, depending on your contract with the bank. Once the Ijarah period is completed, you can have the car by paying a certain nominal amount, or the bank may even choose to gift it to you. 

Get a New Car with Meezan Bank

Meezan Bank offers a Residual Value Ijarah for new cars. It is different from the regular Ijarah model, where you don’t have to pay any amount to Meezan Bank when you acquire the car upon the Ijarah period’s completion. 

With the Residual Value Ijarah, you will pay a monthly rental, but the amount is much lower than that of the regular Ijarah. It’s like this because you will pay a certain amount to the bank if you want to own the vehicle when the Ijarah period ends. You actually have the option to just return the car to Meezan Bank rather than paying the last payment. 

The Residual Value Ijarah allows you to drive your dream car with a low monthly payment. And depending on your financial capacity, you can even get a high-value vehicle which is something that you may not be able to do in a regular Ijarah model. 

Apart from new cars, you can also get used cars with Meezan Bank. You can lease second-hand vehicles, either locally assembled or imported ones. If you want to spend less on your car, this is a great option for you. The Ijarah for used cars is available for a minimum security deposit of just 15%. If you want imported or luxury cars, you can also get them through Meezan Bank’s car Ijarah.

Is Car Ijarah Shariah-Compliant?

Meezan Banks’ Car Ijarah was designed under the bank’s Shariah Supervisory Board’s supervision. As an asset-based contract, the car Ijarah allows the lessor to have ownership of the car during the contract period. According to Islamic Shariah, the ownership, as well as the other rights and even the liabilities, lie with the car’s user. 

This arrangement is different from the usual lease contract because it doesn’t differentiate the nature of the liabilities. All the liabilities are placed on the car’s user. It contradicts Islamic Shariah since, with the car Ijarah, the ownership-related risks still lie with the bank. 

The usage-related risks, however, lie with the user of the vehicle. This arrangement makes the bank, which is the lessor, the owner of the vehicle. The income that is generated through the contract is therefore permissible or Halal with Meezan Bank. 

What Happens If the Car is Stolen?

In the event that the car is destroyed or stolen, most car financing companies would continue to charge the client with the lease until the insurance claim has been settled. However, with the Islamic system, you only have to pay the lease if you still have the car to use. If it has been destroyed or stolen, then the concept of the car lease is void. The bank will not be charging you with a lease. 

What Happens with Late Payments?

Many car finance arrangements incur an extra charge if the monthly payments are not paid on time. This extra amount is considered to be Haram or not permissible. With a car Ijarah, the client may be asked to pay the extra amount to a certain charity if they are late in paying their obligations. The bank has its own charity fund and will process such payments. 

Meezan Bank Car Financing Requirements

It’s easy to apply for car Ijarah with Meezan Bank. You can visit any branch and fill out the application form. You also have to attach the necessary documents so that the bank can process your application quickly. Here are the required documents you need to prepare.

  • A duly completed application form
  • A copy of the most recent payslip (for employees)
  • Proof of Business (for business owners), such as bank certificate, tax return, business association letter, etc. 
  • A copy of bank statements for the last six months
  • A recent photo
  • A specimen signature card 

Once you’ve submitted all these requirements, the processing of your application may take one to seven business days. You will then know if Meezan Bank approved your application. 

Takeaway

This car financing arrangement with Meezan Bank is Shariah-compliant, and it’s a good option for those who are looking for Halal car financing. It is not limited to people who belong to the Islamic faith. Any individual who needs car finance from a good and reliable financial institution can apply to Meezan Bank. 

We’d love to hear your thoughts on this article!

Comments