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Pakistan’s first riba-free car financing: Meezan car ijarah

Car Ijarah is Meezan Bank’s car financing product and is Pakistan’s first interest-free car financing. It is based on the Islamic financing mode of Ijarah (leasing). This product is ideal for individuals who want to get interest-free financing for acquiring a car.

Car Ijarah works through a car rental agreement, under which the Bank purchases the car and rents it out to the customer for a period of 1 to 7 years, agreed at the time of the contract.

Upon completion of the Ijarah period, the vehicle will be sold at a token amount or gifted to the customer.

KEY FEATURES

– Lowest Upfront Payment
– Lowest Up Front Payment
– Rental Payment starts after Vehicle Delivery
– Quick Processing Time
– Tracker will be installed in all vehicles free of installation and monitoring cost
– Free accidental death coverage of up to Rs. 400,000
– Minimum security deposit as low as 15%*
– Meezan Bank will bear W.H.T (With Holding Tax) on purchase of vehicle

WHO IS ELIGIBLE FOR CAR IJARAH?

Permanent employees: 3 months in current job with a minimum 2 years continuous employment history.

Contractual employees: 6 months in current job with a minimum 3 years continuous employment history.

Net take home income: In excess of 2 times the monthly rental (inclusive of takaful).

Spouse’s verifiable income: Clubbed to an extent of 50%.

In case of other loans, all monthly payments including proposed Ijarah rental combined not to exceed 50% of net / take home income.

Both data check & e-CIB should be clear and must not have current default / overdue at the time of case approval.

SELF-EMPLOYED PROFESSIONALS

Businessmen

Minimum experience: 2 years continuous involvement in current business/industry

Position: Proprietor, partner or director (In case of partner or director, percentage of sharing / holding will be applied)

Net take home income: In excess of 2 times the monthly rental (inclusive of takaful).

Spouse’s verifiable income: Clubbed to an extent of 50%.

In case of other loans, all monthly payments including proposed Ijarah rental combined not to exceed 50% of net / take home income.

Both data check & e-CIB should be clear and must not have current default / overdue at the time of case approval.

RESIDUAL VALUE IJARAH (FOR NEW CARS ONLY)

In a regular Ijarah model, the customer does not have to pay any money to the Bank for acquiring the car upon completion of the Ijarah period.

In the Residual Value Ijarah model, the monthly rentals are significantly lower than the regular Ijarah model because here the customer agrees to pay a certain sum to the Bank for acquiring the car upon completion of the Ijarah period.

The customer also has the option that instead of paying the Bank and acquiring the car upon completion of the Ijarah period, he can simply return the car to the Bank.

This model enables the customer to take a car on significantly reduced rental. Customer can also, depending on his monthly rental payment ability, get a much higher-value car than he can under the regular Ijarah model.

– Special Offer: Residual Value Ijarah with Pak Suzuki Motors
– Vehicles for Residual Value Ijarah: Suzuki Mehran, Cultus, Swift, Bolan and Wagon-R
– Period of facility: 1, 2, 3, 4, 5, 6 & 7 years
– Advance Rent/Security deposit
– Minimum 15% of cost of the vehicle
– Maximum 70% of the cost of the vehicle
– Residual value (RV): 1 Years – 5% to 60%
– 2 Years – 5% to 60%
– 3 Years – 5% to 50%
– 4 Years – 5% to 50%
– 5 Years – 5% to 40%
– 6 Years – 5% to 35%
– 7 Years – 5% to 30%
– Up-Front: Rs. 2,500/- Plus FED
– Documentation Charges: At actual
– Free Accidental Death Coverage: Up to Rs. 400,000/-
– Rentals frequency: Monthly Rentals payable through post dated cheques or debit instruction

PREMATURE TERMINATION

If the customer wishes to terminate the Agreement before the agreed period, the customer will have an option to buy the vehicle on the agreed purchase price as mentioned in the Terminal-value schedule forming part of the Ijarah documents.

The purchase price takes into consideration the following amounts:

– The principal outstanding as determined by the amortization schedule of the Ijarah contract
– Residual value amount
– Maturity of RV Ijarah

Upon completion of the Ijarah period and payment of all rentals, Meezan Bank will make the following offers to the customer:

Purchase Option: Customer will have the option to purchase the vehicle from Meezan Bank at a pre-agreed Residual Value.

Return Option: Customer will have an option to return the vehicle to Meezan Bank

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