What is finance leasing?
It is a financing based on the asset or the goods, whereby the client (the lessee) benefits from a fixed asset that he chooses and suits him (the leased property), in return for agreed-upon monthly installments over a specific period of time, and ownership of the leased property is transferred to the lessee at the end of this contract. For a fee From the money or automatically after paying the installments according to the contract and agreement with the lessor.[١]
Financing solutions have become more numerous these days due to people’s need for them to manage their life and livelihood. One of these solutions is what is called financial leasing, which is one of the… Financial methods Which are provided by banks and financial institutions to their clients for the purpose of benefiting according to mutual interest, and clients may be individuals, institutions, companies, factories, etc.[٢]
Financial leasing parties
Financial leasing is a financial system and a contract that has parties that cannot be completed without them, which are as follows:[٣]
- The lessor
It is the institution, company or bank that provides financing to the tenant to purchase the asset for use.
- Tenant
The user of the asset who is entitled to own it at the end of the lease or according to the agreement.
- origin
It is the goods that are used and benefited from during the rental period, such as cars, equipment, real estate, etc.
- Rental installment
It is the amount of money that The tenant pays for it. Benefit from the leased asset throughout the contract period in accordance with needs and financial capacity.
Advantages of financial leasing
Financial leasing allows individuals and establishments to own equipment and tools without the need to invest a large sum of money, and it has many advantages, the most prominent of which are the following:[٤]
- An Islamic financing tool, without major guarantees and without a ceiling, and the most prominent guarantee is the principal or the rent itself.
- The financing volume reaches 100% of the total asset value.
- The proportion between the lease period and the life of the leased asset.
- Flexibility in payment and proportionality between lease installments and cash flows from the leased asset.
- Ease and speed of procedures for renting the asset, contract and agreement.
- non Presence of risks Great for leasing.
- Multiple options such as purchasing the asset or keeping the ownership of the asset with the lessor after the end of the contract.
- Possibility of transferring the contract to more than one client during the rental period.
- Reducing financial burdens on the tenant, such as expenses related to the asset and the possibility of adding them as a fixed installment to the contract.
- Multiple services if the original is a machine or a car.
Categories benefiting from financial leasing
Financial leasing is distinguished by the fact that its beneficiaries represent broad segments of society, due to the diversity of its options. These categories include the following:[٥]
- Individuals.
- Contracting and construction sector.
- Transport sector.
- Telecommunications sector.
- Tourist facilities.
- Health and medical sectors.
- Companies and factories.
- Educational and pedagogical institutions.
Islam's position on financial leasing
The Jordanian Iftaa Department has permitted financial leasing under the following conditions:[٦]
- The bank shall bear its responsibilities in implementing and adhering to the terms of the contract.
- The lease-to-own contract is not concluded before the bank completes the purchase of the property subject to the contract. Rather, the bank begins by having the customer sign a promise to complete the transaction, and then signs the original contract.
- Read all the terms of the contract so that the will is formed with knowledge and evidence.
the reviewer
- ↑ About financial leasing، Bank of Jordan, accessed on 1/22/2022. With modifications.
- ↑ “financial leasing”، Jordan Leasing, accessed on 1/22/2022. With modifications.
- ↑ About Renting، Jordanian Association of Leasing Companies, accessed on 1/23/2022. With modifications.
- ↑ What is financial leasing?، Open market, accessed on 1/23/2022. With modifications.
- ↑ “financial leasing”، Housing Bank, accessed on 1/23/2022. With modifications.
- ↑ Subject: Ruling on the financing lease contract of the Jordan Islamic Bank، Fatwa Department, accessed on 1/23/2022. With modifications.
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