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Vehicle & Asset Finance

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Our experienced consultants can help your business reach new heights by offering Islamic Compliant Ijarah finance lease agreements to enable your business to acquire or lease assets such as:

  • Motor Vehicles
  • Trucks
  • Cranes & Construction Equipment
  • Medical Equipment
  • Plant Equipment
  • Machinery
  • White Goods
  • Business Equipment
  • Office Equipment
  • Farming Machinery

Are you looking for new ways to grow your business? Or maybe you need a new car for your growing family.

There are four different types of equipment or asset finance structures that your business can utilize in order to acquire these assets.

Ijarah Finance

Ijarah Finance can facilitate a financial lease agreement between you or your business (lessee) and the funder (lessor). Strictly for business purposes, the terms of the lease agreement will allow you to use the equipment for an agreed period of time whilst making Lease/Rental payments. Ownership of the asset is transferred to the client once the final lease / balloon payment has been made. The relationship here is between a Lessee (You) and a Lessor (Funder), and the payments are written as a monthly Rental Amount.
Hence this is a Rental Based Contract

Rental Finance / Operating Lease

Similar to a financial lease except the funder retains ownership of the asset. There is NO right to own the asset or equipment at the end of the term. This is a rental contract based on time & payment usage.

Chattel Mortgage

A Chattel Mortgage works in the same way as a fixed mortgage home loan. The financier provides funds for you to purchase an asset or “chattel” and you pay off the loan. The financier uses your asset as security over a loan. Ownership of the asset is yours immediately and this is the key difference between a Chattel Mortgage and a Ijarah Finance Lease. The relationship here is between a lender and a borrower. This is an Interest Based Contract.

Commercial Hire Purchase (CHP)

Commercial Hire Purchase or (CHP) has similarities to a Ijarah lease, except the customer can claim the depreciation on the asset being financed. This type of contract is interest based and the contract is essentially a loan between a lender and a borrower. This type of facility is not very popular today as was in previous years, and is now being replaced by a Chattel Mortgage Structures by most funders and is an interest based contract type.

Finance Comparison

Ijarah Lease Rental Finance Chattel Mortgage Hire Purchase
Ownership The lessor(financier) is the owner of the asset while the lessee(you) makes regular monthly payments. Ownership is transferred to the lessee once the balloon payment has been made at the end of the lease. The asset is owned by the financier. Client(you) owns the asset immediately. The asset is transferred to the hirer once final rental payment has been made.
Facility Type Rental Based Contract Rental Based Contract Interest Based Contract Interest Based Contract
Repayments Type Monthly Rental Based Payment structure The lease amount is for 100% of the value of the asset. Monthly Rental Based Payment Structure Monthly Principal & Interest Based Structure Balloon Can be built into the loan repayment structure Monthly Principal & Interest Based Structure Balloon can be incorporated into the loan to reduce monthly payments.
Balloon Required Not required Optional Optional
Security Asset Asset Asset Asset
Term 1 to 7 Years 24 – 36 Months 1-7 Years 1 to 5 years
Tax Implications Lease/Rental is a tax deductible expense Lease/Rental is a tax deductible expense Interest & Depreciation are a Tax deductible expense Depreciation on the asset is an expense
GST Payments include GST Payments include GST GST can be claimed upfront on the asset being purchased GST may be claimed upfront on the asset being purchased if on accrual basis
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