Al-Ijarah Thumma Al-Bai (AITAB)

There are several banks that offer this package namely Malaysia Industrial Development Finance Berhad, Affin Bank and Maybank.

Al-Ijarah Thumma Al-Bai defines as Hiring facility ending with sales of the said asset:

Ijarah means “rent/lease/hire/let”, Thumma means “followed by/ thereafter” and Al Bai’ means “Sales”

Denotes the two separate contract of Hire and contract of Sales.

An Islamic Hire Purchase financing scheme for vehicle financing. The law governing this product is still hire purchase Act 1967 for Act goods.

There are two contracts underlying for this product :

Contract of hiring (At the point of purchase)

Contract of sales (At the point of full settlement of Account)

Under the Hiring contract, the hirer (customer) hires and acquires the benefit of usage the goods from the owner (bank) at an agreed rental over a specified period. Upon expiry of the hiring period, the hirer signs the Sale contract to purchase of goods from the owner at an agreed price. During the period of the agreement, the bank owns the goods.

How is AITAB transacted?

Dealer/seller sells the goods to the bank , which becomes the owner, in return for payment, which is cash price less deposit paid by hirer for the goods under an Hire Purchase-i agreement.

Upon settlement of the hire rentals, the purchase agreement will be executed automatically, thus transferring the ownership of the vehicle from the bank to the hirer (Release Letter).

However, in the event of the customer failing to perform his obligation to service the hire rental or performs otherwise from the terms and conditions stated in the agreement, the bank has the right to exercise reasonable actions to mitigate its losses.

Hire Purchase-i is an alternative banking concept and it is available for both muslims and non-muslims.

The above description comes from Affin Bank website.

Maybank stated these benefits on their website:

• Easy payment of your instalment via Maybank branches, ATMs, online via Maybank2u.com and Maybank e-Kawanku

• Fast processing and approval

• Attractive and competitive term charge

• Extensive network of dealers nationwide

• Renewal of road tax and motor takaful

However, on Malaysian Industrial Development (MIDF) website, there is a lack of information available there. MIDF serves not just for car financing but rather it includes machinery, equipment or software for business purpose.

If you want to know more about these loans, you can visit either MaybankAffin Bank or MIDF website and contact them if you are interested in taking this loan.

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