Under ijara the bank or lessor owns the asset and leases it to the customer for rent. Ownership risks that properly sit with the lessor stay with the lessor during the lease. Some contracts add a separate sale or gift so the client owns the asset at the end.
Key takeaways
- Rent is the return, not interest on a cash principal.
- Maintenance and insurance duties must be allocated carefully in the contract.
- Common for vehicles, equipment, and property financing.
- Ijara-based sukuk package many leases into investable certificates.