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Ijara
إجارة
An Islamic lease where the bank owns the asset and rents it to you.
Ijara is similar to conventional leasing but with key differences: the lessor retains ownership and responsibility for the asset, the rental rate is fixed, and the transaction is free from interest. Can be structured as lease-to-own (Ijara wa Iqtina).
Islamic perspective
Ijara is permitted because it is a legitimate rental transaction. The bank earns from providing genuine use of an asset, not from charging interest on money.
Example
Al Rayan Bank buys a car for £25,000 and leases it to Mariam for £500/month over 4 years. Mariam uses the car throughout. At the end she can choose to purchase it at an agreed residual value.
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