Question

(a) Explain modes of operation for AITAB car financing.

Answer 1

Aitab will generally be acting as a hire purchase type of financing in Islamic financing world where there will be no concept of interest because interest is always treated as halal in Islam.

It is a lease contract that will bind the lessor and lessee. There would be a fixed rental payment during the period of the lease.

It is a type of hire purchase conventional concept in which parties will be entering into a lease contract for a specified time period and after the specified time period the parties will be agreeing on to selling of the assets

There are two modes of Aitab -

A. Al-Ijarah- Means a lease contract that binds the lessor and lessee.

B. Al-Bai-it is a contract of sale in which the ownership is transferred to the Lessee at the end of the period.