What is Murabaha ?

What is Murabaha (to the Purchase Orderer)?

Murabaha (for the one who orders the purchase) is a Shariah-compliant financing method in which the company purchases an asset and sells it to the client at a pre-agreed profit margin. The client pays the amount through fixed monthly installments over an agreed period.

Parties of the Murabaha (to the Purchase Orderer):

• Seller: Specialized Islamic Finance Company.
• Asset: The item the client wishes to acquire (goods, property, or vehicle).
• Purchase Orderer: The client.
• Supplier/Vendor: The original seller selected by the client to provide the asset.
  

How Murabaha (to the Purchase Orderer) Works?

• The client goes to the supplier/ seller to identify the asset they wish to purchase (goods, property, or vehicle).
• The client approaches to the Specialized Islamic Finance Company and applies for (Murabaha to the purchase orderer) financing.
• The client provides a binding promise to purchase the asset they wish to own.
• The company purchases the asset from the supplier.  
• The Specialized Islamic Finance company sells the asset to the client under (Murabaha to the purchase orderer) contract, in return for monthly installments and over a specified period of time at a pre-agreed profit margin.  
• Upon signing the Murabaha contract, the client becomes the legal owner of the asset.