leasing. An investor buys equipment or real property and owns it, charging a rent to a user who takes possession of the property for a specified period of time. At the end of the lease, the property reverts to the owner, lessor.
Quick definition: Islamic leasing agreement. Because Islam forbids the charging of interest, Muslims get an Ijara which enables the bank to seek profit through the leasing of assets (house, car etc) rather than by actually lending money. Ijarah wa iqtinah is an extension of the concept which is a hire purchase agreement.
contract of lease and hire
means letting on a lease. It refers to the sale of a definite usufruct of any asset in exchange for a definite reward. It refers to a contract of land leased at a fixed rent payable in cash and also to a mode of financing adopted by Islamic banks. It is an arrangement under which the Islamic banks lease equipment, buildings or other facilities to a client, against an agreed rental.
(Leasing) A contract where the bank or financier buys and leases equipment or other assets to the business owner for a fee. The duration of the lease as well as the fee are set in advance. The bank remains the owner of the assets. This type of contract is a classical Islamic financial product. Leasing is also a lawful method of earning income, according to Islamic law. In this method, tangible assets such as machinery, a car, a ship, a house, can be leased by one person (lessor) to the other (lessee) for a specific period against a specific price. The benefit and cost of the each party are to be clearly spelled out in the contract so that any ambiguity (Gharar) may be avoided.
An Islamic lease agreement. Instead of lending money and earning interest, Ijarah allows the bank to earn profits by charging rentals on the asset leased to the customer. Ijarah wa iqtinah extends the concept of ijarah to a hire and purchase agreement.