Bank Alfalah Car Ijarah Islamic Banking
Alfalah Car Ijarah lets you get the car of your choice. With simple, convenient and flexible solutions that are Shariah compliant, you also get the following features and benefits:
Alfalah Car Ijarah Features:
- Choose from new, used and imported cars
- Flexible tenure from 3 to 7 years
- Security deposit options from (20% to 70%)
- Financing arrangement from 0.2 Mn to 6 Mn
Alfalah Car Ijarah Benefits:
- No upfront Insurance/Takaful charges
- No upfront registration charges
- No rentals before delivery of the vehicle
- Competitive pricing
- Minimal documentation and application fee
- No hidden costs
- Quick Processing time
* Terms and conditions apply
|Income||For Salaried Individual:Minimum Rs. 25,000For Self Employed Businessman/Professional:Minimum Rs. 50,000|
|Customer segment||Salaried individual, Self-employed businessman/professional|
|Age limit||For Salaried:
Minimum 21 Year
Maximum 60 Years (at the time of maturity)For Self Employed Businessman/Professional:Minimum 21 Years
Maximum 65 Years (at the time of maturity)
- Complete application with signatures
- Copy of CNIC/NICOP/POC/Smart ID
- 2 latest photographs
- Copy of salary slip/salary letter with breakup of the salary
- 6 months bank statement (Self Employed Businessman/Professional)
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FAQs (Frequently Asked Questions):
1. What is Alfalah Car Ijarah?
Alfalah Car Ijarah is simply a rental agreement under which the car is given to the customer on rent for a period agreed at the time of the contract. The customer is required to deposit an initial amount (security deposit) with the Bank. Upon completion of the lease period the customer has two options either to return the car and take away the security deposit or take ownership of the car against his security deposit or any other agreed amount via separate sale transaction.
2. Key USPs
• No upfront Takaful (Islamic concept of insurance) charges
• No upfront registration charges
• No advance rental
• No rental before the delivery of the vehicle
• Competitive rental
• Quick processing
3. How is Alfalah Car Ijarah interest free?
Alfalah Car Ijarah works on the principles of Ijarah and complies with the requirement of a valid Ijarah transaction. In this the asset remains in the ownership and risk of the Bank, and the customer only pays rent for the use of the asset; just like house rent.
The product features and agreements are carefully designed as per the rules of Ijarah and have been reviewed and approved by Bank Alfalah Islamic’s Shari’ah Board.
4. Car Ijarah vs. Conventional Leasing
The major differences of Car Ijarah and conventional leasing are as follows:
|Alfalah Car Ijarah||Conventional Leasing|
Ownership and risk
|The asset remains in the ownership of the Bank throughout transaction tenure.Risks and rewards of ownership lie with the owner i.e. any loss to the asset beyond the control and absence of any negligence of the lessee should be borne by the lessor.||Under conventional leasing, although ownership remains with the lessor but all risks of ownership are parked with the customer (lessee) as well.|
|The rental amount decided at the time of the agreement cannot fluctuate unilaterally at the sole discretion of the Bank||Generally in conventional leasing the financial institute can at its sole discretion can increase transaction rates and rental.A clause for above is explicitly mentioned in the conventional leasing contracts.|
|Bank/Lessor All expenses relating to the ownership of the asset i.e. Takaful, accidental damage (without negligence of lessee) etc. will be borne by the lessor/Bank.Lessee All actual operating/overhead expenses related to running the asset will be borne by the lessee.Moreover, expenses for damage to the asset by lessee’s negligence are also borne by the customer||In conventional leasing all expenses relating to the corpus of the asset i.e. insurance, accidental repairs, actual operating/overhead etc. are borne by the lessee.|
Late payment charges
|Lessee may be asked to promise that, if he/she fails to pay rent on its due date, he will pay certain amount to a charity account.This amount cannot be taken in Bank’s income and its nature is of charity not of Riba. Charity is charged only to discipline the customers||In most contemporary financial leases, an extra monetary amount is charged if rent payment is not paid on time and is taken in the income of the institute/bank.This extra amount is the considered as riba (interest) which is impermissible in terms of Shari’ah.|
|In case of car theft or severe damage (that is the asset becomes unusable), rentals are stopped because rentals are obtained for the use of assets.||Monthly payments are not stopped in any case of theft or sever damage to the asset.|
|Rentals start after one month (approx.) of the delivery of an asset.||Monthly payments start from the booking of an asset irrespective asset is delivered to the customer or not.|
At the end
|Upon completion of the Ijarah tenure, the customer can purchase the car from Bank Alfalah Islamic via separate sale deed or can return the car to the bank and take back his security deposit.||Under conventional leasing the vehicle is automatically transferred in the name of the customer as part of the contract.|
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5. Can I pay the late payment charges on my own and submit the receipt to the Bank?
At present this option is not available. All late payment charges are credited to a Charity Account maintained at the head office and is directly supervised by the Resident Shari’ah Board Member (RSBM)/ Shari’ah Board of the Bank so you can be assured that your charity is used for the right cause.
6. Can I make balloon payments?
Balloons payments are not allowed.
7. What is the Takaful arrangement in Alfalah Car Ijarah?
Bank Alfalah Islamic being the owner of the car is responsible for Takaful of the car and for payment of Takaful premium. In this regard, Bank Alfalah insures car from reputable Takaful companies using the Islamic mode of Insurance (Takaful) and pays Takaful premium as part of its ownership expense.
8. What is Takaful or Islamic Insurance?
The word Takaful is derived from the Arabic verb Kafala, which means to guarantee; to help; to take care of one’s needs.
Takaful is a system of Islamic insurance based on the principle of Ta’awun (mutual assistance) and Waqf. It is a pact among a group of members who agree to jointly guarantee themselves against loss or damage to any one of them as defined in the pact.
Takaful is operated on the basis of shared responsibility, brotherhood, solidarity and mutual cooperation or assistance, which provides for mutual financial security and assistance to safeguard participants against a defined risk.
9. Will I be required to pay my rentals in case of theft/ total loss of Car?
In Ijarah transactions, the customer pays the rent for the use of the asset and in cases of theft or total loss the rentals will be stopped immediately. The Bank (Lessor) in such cases can only take the proportionate rent for the actual number of days for which the asset was used; unlike the conventional leasing practice where the rental payments continue even after theft or total loss. The customer is required to immediately (or as soon as possible) inform the Bank about the incident.
10. What will be the procedure if I want to purchase car from the Bank during the Ijarah Tenor?
Vehicle, under the Ijarah facility, may be purchased during the Ijarah tenor by the customer, utilizing/executing the “Undertaking to Purchase” against the respective month and latest outstanding rentals. Customer would be required to settle all outstanding rentals, termination price, cheques return charges, and charity amount due to delay in payment of rentals; prior to taking delivery of the vehicle.
11. What will be my responsibilities in case of theft/ total loss?
Following a major accident or theft of the vehicle(s), the Customer is required to submit a written report to the Bank, informing about the incident. The report should be received by the Bank through proper mailing channels. Customer is also required to provide the documents required by the Takaful Company along with the original FIR.
12. What events will be treated as negligence on my part?
Any act or failure to act, with regards to the Ijarah agreement executed between the Bank and the Customer, shall be treated as negligence on my (customer’s) part. For instance; (i) compliance with the Federal, Provincial, Municipal and local laws, (ii) vehicle to be operated as per the Takaful (Islamic insurance) policy covering the vehicle, (iii) vehicle operated by suitably trained personnel, (iv) vehicle will not be driven by a person without a valid license, etc.
13. What will be the treatment of Security Deposit in case of termination of facility due to theft/ major accident?
In case of termination of Ijarah facility due to theft/major accident, the security deposit will be refunded to the customer after netting off the following amounts:
- Outstanding rentals due till the time of incident. Bank will charge the rental for all those days when asset was in the use of Customer up to the incident.
- Any shortfall in Takaful claim due to negligence of the Customer such as late intimation to Bank and the Takaful/ company, non-provision of required document(s), violation of ljarah agreement such as sub-letting the vehicle(s) etc.
- Cheque return charges
- Charity amount due to delay in payment of rentals
- Any other amount due from the Customer