Bank Islami’s Auto Finance facility is certainly a very convenient option for the customers in purchasing the car of their choice, in accordance with Shariah Compliant principles. Any customer should not simply dream of having his or her car, because Bank Islami’s Auto Financing is indeed the best option for them to purchase a new car.
Some of the features of Bank Islami’s Auto Finance are:
|Auto Financing||For New/Used/Re-conditioned vehicles|
|Duration of Auto Financing||1 to 7 Year|
|Equity of Customer||15% to 90%|
|Charges for Processing||It is Rs. 4,700 (Rs. 1200 is a Pre-processing amount, a part of the Rs 4,700 Amount for the first time)|
|Installation of Tracker||The installation of Tracker is Mandatory and it is installed by Bank Islami itself.|
The facility of Islami Auto Finance is based on Diminshing Musharakah under Shirkat-ul-Milk arrangement. With the help of joint partnership agreement, the share of BIPL’s in vehicle gets the representation from Musharakah units. The Bank is going to rent its share in vehicle to the customer in exchange for the periodical rents that they will be entitled to receive. Along with the periodical rental payment, the customer is also going to have a share in BIPL’s (Musharakah units) on a periodical basis. When the complete units of Musharakah will be purchased, the customer is going to become the sole owner of the vehicle.
Concept of DM based Auto Financing
Diminshing Musharakah (DM) is concept of a partnership transaction in which it is agreed by the partners for terminating the Shirkat (parternship) on a gradual basis by means of purchase of one partner’s share by other partner. Under Diminishing Musharakah financing, both the bank and client have their participation in the ownership of an asset on basis of ‘Shirkat-ul-Milk’ (which is the Joint ownership). All the DM based auto financing transactions consists of the three steps mentioned below: –
- The participation in the ownership is carried out on an asset by Bank and Client (in this way Musharakah is created) and the Islamic Bank’s ownership is divided into a number of Musharakah units).
- The share of ownership is rented out the Bank to the client (which means an Ijarah transaction is being carried between Islamic Bank and client); and
- With the gradual sale of Musharakah units by the Bank to the client on periodic basis and at the end of financing tenure, client would certainly become the sole owner of the asset.
It can be said that the DM Financing has a combination of Musharakah, Ijarah and Sale transactions as well.
In the end it can be said that Bank Islami Auto Loan is certainly very valuable for the customer because they can avail it for both Brand New Car and Reconditioned Cars. With very easy processing methods and basic level of documentation, Bank Islami Auto Loan is indeed an option that any customer cannot afford to miss.