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Islamic Car Finance Calculator | Murabaha & Ijara Payments

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An Islamic car finance calculator computes payments for the two main halal auto structures. Murabaha: the bank buys the car and resells at cost plus disclosed profit — flat profit = principal × rate × years, spread evenly. Ijara wa Iqtina: reducing-balance lease payments computed like an annuity on the bank's financed amount.

Last updated: September 2026 · Free · No sign-up required

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Min. 10-15% on most halal car finance products.

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Al Rayan, Wahed Auto, ADIB publish current rates.

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Quick reference

Same $30k car, $6k down, 4.9% profit rate:

TermMurabaha /moTotal profit
36 mo$858.67$3,528
48 mo$598.83$4,704
60 mo$536.00$5,880

receipt Profit is fixed

Murabaha profit is agreed upfront as a number, not a floating interest rate — late-payment penalties are charity-bound, not income.

home_work Ijara trade-off

Ijara's reducing rent costs less overall than flat Murabaha profit on long terms, but the bank owns the car until final purchase.

payments Deposit effect

Every $1,000 extra deposit saves roughly $196 of Murabaha profit on a 4-year 4.9% deal.

handshake Early settlement

Reputable contracts rebate unearned profit on early payoff — ask for the rebate formula in writing before signing.

lightbulb A real example — $30,000 car on Murabaha

$30,000 car, $6,000 deposit, 48 months, 4.9% annual profit rate.

Result: Monthly payment ≈ $598.83; total profit $4,704 on $24,000 financed.

What this means: Extending to 60 months drops the payment to $536 but raises total profit to $5,880 — 25% more cost for $63/month less.

Formula & methodology

Formula: Murabaha: monthly = (P − D)(1 + r·y) ÷ n; Ijara: monthly = standard reducing-balance annuity on (P − D)

Two halal structures, two maths

Murabaha is a cost-plus sale: the financier buys the car you choose and sells it to you at a disclosed profit. Profit is computed flat on the financed amount: profit = (price − deposit) × rate × years, then divided by months into level installments. Early settlement typically rebates unearned profit.

Ijara wa Iqtina is lease-to-own: monthly rent on a reducing balance (like an annuity) plus eventual transfer of ownership. Later-year payments are interest-light by construction because rent follows the bank's remaining ownership share.

Example: $30,000 car, $6,000 down, 48 months at 4.9% — Murabaha profit = $24,000 × 0.049 × 4 = $4,704 → $598.83/month.

Frequently asked questions

How is a Murabaha car payment calculated?
Financed amount × profit rate × years gives total profit; add the financed amount and divide by months. $24,000 financed at 4.9% for 4 years = $4,704 profit → $598.83 monthly.
Is Islamic car finance actually different from a loan?
Economically the payments look similar, but legally the bank owns/resells the asset (Murabaha) or retains ownership during lease (Ijara) — profit is from trade or lease, not interest on a money loan.
Murabaha or Ijara — which costs less?
On the same rate and term, Ijara's reducing-balance rent usually totals less profit than flat Murabaha profit, especially beyond 48 months. Compare both above before choosing.
Can I pay off Islamic car finance early?
Yes. Contracts typically rebate the unearned portion of Murabaha profit; there should be no penalty beyond an admin fee — check your agreement's early-settlement clause.
Who owns the car during an Ijara contract?
The financier retains legal ownership throughout the lease term — you are the lessee with exclusive use, and ownership transfers to you at the end (that is the 'wa iqtina', the acquisition promise). Practically, this means you generally cannot sell the car mid-term without settling the contract first, and the registration documents will reflect the financier's interest.
Who pays for insurance and maintenance in Islamic car finance?
In Ijara, major ownership costs like comprehensive (takaful) insurance traditionally sit with the owner — the financier — while routine maintenance and wear fall to you as lessee. In Murabaha you own the car from day one, so all running costs are yours. Actual contracts vary by bank and country, so read the cost-allocation schedule before signing.
Are late-payment penalties allowed in Islamic finance?
Conventional late fees that profit the bank are not permitted, since they resemble interest on a debt. Many contracts instead require a charitable donation on late payment, or a fixed administrative fee covering actual collection costs — practices differ by jurisdiction and scholar. Check what your contract specifies rather than assuming a conventional penalty clause.
How do I compare a 'profit rate' with a conventional APR?
Ask for the effective rate: in Murabaha the flat profit rate understates the true cost versus a reducing-balance APR — a 5% flat rate over 5 years behaves roughly like an 8–9% reducing-balance rate. In Ijara the quoted rental rate is already reducing-balance, so it compares more directly. Always compare the total cost of finance, not the headline rate.

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