Islamic car financing has become increasingly popular in Pakistan. With the rising prices of vehicles, it is cheaper to finance a car through a bank as compared to liquidating one’s savings. With the current growth momentum in Islamic Banking, Al Baraka Auto Ijarah is becoming a popular product in the car leasing segment. For this purpose, we have conducted a review of Al Baraka’s product and presented our analysis.
The important aspects to gauge when selecting an Islamic car financing facility are rental costs and tenure of financing, loan amounts, the bank’s footprint in Pakistan and ease of repayments. For Al Baraka Auto Ijarah, the review is as follows:
- Al Baraka is currently offering the lowest rental rate on car financing. Their auto Ijarah facility for new and used vehicles has a 3.5% rental profit margin as compared to an industry average of 5%. When the cost of financing a car is calculated over 5 year tenure, Al Baraka Auto Ijarah proves to be a cheaper option.
- The maximum financing amount available to an individual (after consideration of all existing debts and standard credit regulations) is Rs. 3,500,000. This is in line with the financing amounts offered by most banks. Al Baraka Auto Ijarah provides sufficient financing to select any vehicle in Pakistan.
- Repayment options include post-dated cheques presented at the time of availing the auto loan or direct debit instructions marked on a consumer’s Al Baraka account. Additionally, balloon payments can be made to reduce the outstanding principal amount during the financing tenure. This is especially useful for individuals who aspire to make partial payments with annual bonuses.
We, at MyBankersOnline, feel that Al Baraka Auto Ijarah is one of the best products available for consumers looking for car financing. With lower financing costs, greater choices for vehicles, and the option to reduce the financing debt through balloon payments, Al Baraka’s product is in line with the basic requirements of a consumer. Providing the lowest cost for car financing, Al Baraka Auto Ijarah is more competitive as compared to its conventional counterparts. The aggressive momentum of Islamic Banking in Pakistan along with reduced monthly installments makes Al Baraka Auto Ijarah a high recommended car financing facility in the Pakistani market. We, at MyBankersOnline, strongly endorse Al Baraka as an institution for leasing facilities and recommend Al Baraka Auto Ijarah to purchase or upgrade vehicles.