Comparison between conventional & Islamic bank auto finance.

Comparison between ijarah and conventional leasing:

Ijarah
Ijarah in Arabic literally mean 'to give something on rent'. The term Ijarah has two meanings in
Islamic perspective
One meaning of Ijarah is to employ the services of a person on wages given to him as a
consideration for his hired services." The employer is called 'mustajir' while the
employee is called 'mu`jir'.
Second meaning of Ijarah relates to the usufructs of assets and properties, and not to the
services of human beings. 'Ijarah' in this sense means 'to transfer the usufruct of a
particular property to another person in exchange for a rent claimed from him.' In this
case, the term 'Ijarah' is analogous to the English term 'leasing'. Here the lessor is called
'Mujir', the lessee is called 'mustajir' and the rent payable to the lessor is called 'ujrah'.
Note: For this report the second type of Ijarah is more relevant, because it is generally
used as a form of investment, and as a mode of financing also.

Ijarah contract:
Ijarah is a lease agreement under which a certain asset is leased out by the lessor to a lessee
against specific rent or rental for a fixed period. Ijarah contract is used to finance lease for items
such as real estates, buildings, equipments, machineries, computers, motor vehicles, and other
goods; except the things that are haram or prohibited in Islam. Also the things that cannot be
used without consuming cannot be leased out e.g. money, edibles, fuel, etc. Two fundamental
principles of Islamic finance are:
It has to be asset-based financing: The first fundamental principle of Shariah is that
as opposed to conventional financial dealing, profit is generated when something
having intrinsic utility is sold or offered for use. Money has no intrinsic value. As
such dealing in money cannot generate profit unless converted into real assets.
There has to be an element of risk: The second basic element of Shariah is that one
cannot claim a profit or fee for a property/transaction, the risk of which was never
borne by him.
Conventional lease
It is a process by which a firm can obtain the use of a certain fixed assets for which it must pay
a series of contractual, periodic, tax deductible payments. The lessee is the receiver of the
services or the assets under the lease contract and the lessor is the owner of the assets.

Conventional lease contract

It is a contract between a Lessor and a Lessee for the hire of a specific asset. The lessor retains

the ownership of the asset but the right to use the asset is given to the lessee for an agreed period

of time in return for a series of payments paid by the lessee to the lessor.

COMPARISON BETWEEN IJARAH AND CONVENTIONAL

LEASE

Ijarah and conventional lease both are types of lease, and are two similar concepts. However,
there are some specific prohibitions which render conventional lease to be forbidden under
Shariah. Following characteristics were studied to find the differences and similarities in both
types of leasing contracts:

Ownership: Who owns the asset after the lease contract?

Risk bearer: After the agreement on lease contract, the risk of ownership lies with

whom?

Starting time for rental obligation: When would the rental obligation start, after the

agreement on lease contract?

Usefulness of property: What is the minimum useful life of the property?

Penalty: Can penalty be charged if lessee fails to fulfill the obligation?

 Repossession of an asset: Is repossession of an asset allowed at predetermined

/bargain price?

Asset has value upon completion of leased period: Does asset hold value upon

completion of leased period?

Premature termination: Is premature termination allowed if the lessee has violated

or contravened the terms of the lease?

Effect of premature termination: Are all the obligations that are still executory on

both sides considered discharged as a result of premature termination?

Sale and lease back as one transaction: Could sale and lease back be completed

under one transaction?

Determinant of rent: On what basis has rent been determined?

Equivalent to a sale: Is lease equivalent to a sale?

FINDINGS
After comprehensive review of the collected article and analysis of literature the findings are as

follows:
Ownership:

Ijarah: Muajjir (lessor) is the owner of the leased property.

Conventional Lease: In conventional leasing the creditor institution (banks, leasing

companies etc.) retains the ownership of the asset throughout the term of the contracts.
 Risk bearer:
Ijarah: As Ijarah is an asset based contract, and lessor or mu`jir has the ownership of the

asset, therefore all the ownership related rights and liabilities lie with the mu`jir and mustajir

is responsible for all the usage related rights and liabilities. Any loss or harm caused by

factors beyond the control of the Mustajir lessee shall be borne by the Muajjir.
Conventional lease: The lessor assumes and manages the risk of the asset.

Starting time for rental:

Ijarah: In Ijarah the rental starts from the day the asset is handed over to the Mustajir so

that he is able to make productive use of that property or machinery.

Conventional lease: In conventional lease the rentals start from the day the lessee makes

payment for the asset/machinery/property.

Profit:

Ijarah: In Ijarah the profit is the rent for use of property/machinery.

Conventional lease: In conventional lease the profit is for money invested in the property/

machinery.

Valuable use:

Ijarah: Asset to be leased should have valuable use.

Conventional lease: Asset to be leased must have a valuable use; things having no usufruct

cannot be leased.

Penalty of Late Payment of rent:

Ijarah: The bank or financial institution is not allowed to charge the customer an additional

amount in case of delays in payment of the rentals since it is considered Riba. Islamic

scholars have found a solution customer could be asked to pay a certain amount to charity.
Conventional lease: The bank charges a certain amount as a penalty for late payment.
Continuation of lease rentals in case of total loss or theft of asset:

Ijarah: If the leased asset is lost or stolen the Islamic bank does not charge the lease rental

because in the Islamic system, rent is consideration for usage of the leased asset, and if

the asset has been stolen or destroyed, the concept of rental becomes void.

Conventional lease: If the leased asset is stolen or destroyed, the conventional lease

company or bank continues charging the lease rent till the settlement of the Insurance

claim.

Insurance of the asset:

Ijarah: Asset is insured through Takaful (Islamic product of insurance)

Conventional lease: In conventional lease the asset is insured through insurance companies

Financing for:

Ijarah: It provides financing for tangible assets such as property, machinery, vehicles etc.

Conventional lease: It also provides financing for tangible assets.

Time period:

Ijarah: Ijarah is commonly used for long and medium term fixed asset financing, project

financing and for retail products such as homes and automobiles.

 Conventional lease: Conventional leasing is also applicable to long and medium term assets

like vehicles, houses and land.

lessees commitment:

Ijarah: Basic rule for Ijarah financing is that the leased asset be used productively and in

ways permitted by Islamic law.

Conventional lease: It does not require any such commitment.

Securitization of asset:

Ijarah: The mu`jir can sell the asset to a third party, as he is the owner of the asset. And all

the rights and obligations will then be on part of the third party with regard to the purchased

part of the asset.

Conventional lease: Leased item cannot be sold to another person by the lessor but lessee

can do it after meeting the lease obligations.

Repossession of an asset:

Ijarah: There cant be two contracts in one contract. Since the purpose of purchase bargain

option is entirely different than the purpose of transferring the usufructs of an asset.

Inserting the clause of purchase bargain option serves the purpose of another tract. On the

one hand it allows the lessee to avail the usufructs of the leased asset and on the other hand it

also gives the right to the lessee to purchase the same leased asset, which is not allowed in

Shariah.
 Conventional Lease: The lease must not contain an option to purchase the asset at a bargain

price.

Valuation upon completion of leased period:

Conventional Lease: The asset must have secondary value after the expiry of the primary

lease term.

Ijarah: A leased asset must have a value upon completion of the agreed leased period.

Premature termination of lease contract:

Ijarah: If any term of the agreement is violated by lessee then the lessor has the right to

terminate the Ijarah contract unilaterally. However, if no term is violated then the Ijarah

cannot be terminated without mutual consent.

Conventional Lease: Lease can be terminated in the event that the lessee fails to meet his

obligations, notably the obligation to pay rent. The lessor must then instigate legal

proceedings involving the bringing of a claim, where equipment is concerned. Lessee cant

terminate lease if contract does not contain cancellation clause.

Service charges:
Ijarah: Islamic bank charge fee or service charge for the services they provide such as

underwriting, letters of credits, letters of warranties, remittances and correspondence services

etc. (It is pertinent to indicate in this regard that no charge can be taken against financial

guarantees per se. Only management or agency charges can be taken.)

Conventional lease: Conventional bank also take services charges from its customers.
Effect of increase in cost of the asset:
Ijarah: Mu`jir pays the same rate as when mu`jir began the lease even if the cost of asset

goes up.
 Conventional lease: Same is the case with conventional lease, however, some of the

financial institution increase rate of interest as it changes.

Upgrading:
Ijarah: Ijarah do not offer any up-gradation options but for such undertakings new Ijarah

contracts have to be negotiated

Conventional lease: The lessor can upgrade the asset as new equipment becomes available

in the market after paying some additional cost.

Change in rental:
Ijarah: The lessor cannot increase the rent unilaterally, and any agreement to this effect is

void.

Conventional lease: In conventional leasing the market interest rates are passed on to lessee

especially if these are upwards

Payment in advance:
Ijarah: The rent or any part thereof may be payable in advance before the delivery of the

asset to the lessee, but the amount so collected by the lessor shall remain with him as 'on

account' payment and shall be adjusted towards the rent after its being due.
Conventional Lease: similar situation prevails in conventional leasing.
Compensation:
Ijarah: If the leased asset has totally lost the function for which it was leased, and no repair

is possible, the lease shall terminate on the day on which such loss has been caused.

However, if the loss is caused by the misuse or by the negligence of the lessee, he will be

liable to compensate the lessor for the depreciated value of the asset as it was immediately

before the loss.

Conventional Lease: The loss or any other damage to asset is lessees responsibility

Effect of premature termination:

Ijarah: From the time of termination, the lessee is not obliged for rental payment
 Conventional Lease: On termination of lease contract, all obligations that are still executor

on both sides are discharged.

Sale and lease back as one transaction:

Ijarah: Sale and lease back are allowed, but only as two separate transactions.

Conventional Lease: This transaction involves the sale of the property by one company to

another which in turn leases the same property back to the original seller.

Determinant of rent:
Ijarah: Rent is determined by market given forces. In practice, the market rate of interest is

used to determine the rental rate, although this is not explicitly stated.
Conventional Lease: Lessors consider market related forces while scheduling lease

payments. The market rate of interest provides a basis for lease determination.
Equivalent to a sale:
Ijarah: Leasing differs from sale in the way that it does not transfer the corpus or ownership

of the property, which remains with the transferor.

Conventional Lease: A manufacturer or dealer doesnt recognize any selling profit on

entering into an operating lease because it is not the equivalent of a sale.

Difference between Islamic and conventional auto finance.
Islamic bank auto finance procedure & requirements:
What is Meezan Car Ijarah?

Car Ijarah is Meezan Banks car financing product and is Pakistans first Interest-free car
financing. It is based on the Islamic financing mode of Ijarah (leasing). This product is ideal for
individuals who want to get interest-free financing for acquiring a car.

Car Ijarah works through a car rental agreement, under which the Bank purchases the car and
rents it out to the customer for a period of 1 to 7 years, agreed at the time of the contract. Upon
completion of the Ijarah period, the vehicle will be sold at a token amount or gifted to the
customer.
Key Features

Lowest Up Front Payment

 Rental Payment starts after Vehicle Delivery

Quick Processing Time

Tracker will be installed in all vehicles free of installation and monitoring cost
 Free accidental death coverage of up to Rs. 400,000

Minimum security deposit as low as 15%*

Meezan Bank will bear W.H.T (With Holding Tax) on purchase of vehicle

Who is Eligible for Car Ijarah?

 Salaried Professionals

Permanent employees: 3 months in current job with a minimum 2 years continuous

employment history

Contractual employees: 6 months in current job with a minimum 3 years

continuous employment history.

Net take home income: In excess of 2 times the monthly rental (inclusive of takaful)

Spouses verifiable income: Clubbed to an extent of 50%.

In case of other loans, all monthly payments including proposed Ijarah rental combined
not to exceed 50% of net / take home income

Both data check & e-CIB should be clear and must not have current default / overdue at
the time of case approval
 Businessmen

Minimum experience: 2 years continuous involvement in current business /

industry

Position: Proprietor, partner or director (In case of partner or director, percentage of

sharing / holding will be applied)

Net take home income: In excess of 2 times the monthly rental (inclusive of takaful)

Spouses verifiable income: Clubbed to an extent of 50%.

In case of other loans, all monthly payments including proposed Ijarah rental combined
not to exceed 50% of net / take home income

Both data check & e-CIB should be clear and must not have current default / overdue at
the time of case approval

Residual Value Ijarah

(For new cars only)

In a regular Ijarah model, the customer does not have to pay any money to the Bank for
acquiring the car upon completion of the Ijarah period.
In the Residual Value Ijarah model, the monthly rentals are significantly lower than the regular
Ijarah model because here the customer agrees to pay a certain sum to the Bank for acquiring the
car upon completion of the Ijarah period. The customer also has the option that instead of paying
the Bank and acquiring the car upon completion of the Ijarah period, he can simply return the car
to the Bank.
This model enables the customer to take a car on significantly reduced rental. Customer can also,
depending on his monthly rental payment ability, get a much higher-value car than he can under
the regular Ijarah model.

Special Offer - For all new locally assembled & noncommercial vehicles

Vehicles For Residual Value Ijarah: Suzuki, Toyota & Honda

Period of facility 1, 2, 3, 4, 5, 6 & 7 years

Advance Rent /Security deposit Minimum 15% of the cost of the vehicle
Maximum 50% of the cost of the vehicle

Residual value (RV) 1 Years - 60%

2 Years - 60%
3 Years - 50%
4 Years - 50%
5 Years - 40%
6 Years - 35%
7 Years - 30%

Up - Front Rs. 2,500/- Plus FED

Documentation Charges At actual

Free Accidental Death Coverage Up to Rs. 400,000/-

Rentals frequency Monthly Rentals payable through postdated cheques or debit instruction
Premature Termination

If the customer wishes to terminate the Agreement before the agreed period, the customer will
have an option to buy the vehicle on the agreed purchase price as mentioned in the Terminal-
value schedule forming part of the Ijarah documents. The purchase price takes into consideration
the following amounts:

The principal outstanding as determined by the amortization schedule of

the Ijarah contract.

Residual value amount.

Maturity of RV Ijarah

Upon completion of the Ijarah period and payment of all rentals, customer will have a option to
purchase a car.

Car Ijarah Products

New Car
Choose from a range of new models and be on your way to owning the vehicle of your
dreams.

Used Car
In addition to leasing of new cars, Meezan Bank also provides the unique opportunity of
leasing second hand, both locally assembled and imported vehicles. This feature is
specifically designed as a highly economical option. The Used Car Ijarah facility is made
available at a minimum-security deposit as low as 15%.

Imported Car
Car Ijarah is not just available for new and used car financing but also for imported
varieties of cars.

Special Offers

Residual Value Ijarah

Meezan Bank Car Ijarah Introduces Residual Value Financing enabling customer to afford luxury
with economy, where the customer can enjoy the benefits of eased rental.

PMYBL Car Financing

To provide selected vehicles in shape of Car Ijarah by focusing on unemployed but educated
youth looking for establishing new income source such as Taxi, Delivery Vans and similar
activities.
Learn More

Residual Value Ijarah

Meezan Bank Car Ijarah Introduces Residual Value Financing enabling customer to afford luxury
with economy, where the customer can enjoy the benefits of eased rental.

PMYBL Car Financing

To provide selected vehicles in shape of Car Ijarah by focusing on unemployed but educated
youth looking for establishing new income source such as Taxi, Delivery Vans and similar
activities.
Learn More

Residual Value Ijarah

Meezan Bank Car Ijarah Introduces Residual Value Financing enabling customer to afford luxury
with economy, where the customer can enjoy the benefits of eased rental.

PMYBL Car Financing

To provide selected vehicles in shape of Car Ijarah by focusing on unemployed but educated
youth looking for establishing new income source such as Taxi, Delivery Vans and similar
activities.
Learn More

Used Car Financing

Meezan Bank also finances Used Vehicles through Car Ijarah!

In addition to leasing of new cars, Meezan Bank also provides the unique opportunity of leasing
second hand, both locally assembled and imported vehicles. This feature is specifically designed
as a highly economical option. The Used Car Ijarah facility is made available at a minimum-
security deposit as low as 15%.
How is Car Ijarah Shariah-compliant?
Car Ijarah, designed under the supervision of Meezan Banks Shariah Supervisory Board, is
unique to car leasing facilities provided by other banks.

Rights & liabilities of Owner v/s User

An Islamic Ijarah is an asset-based contract, i.e. the Lessor should have ownership of the asset
during the period of the contract. Under Islamic Shariah, all ownership related rights and
liabilities should lie with the owner while all usage-related rights and liabilities should lie with
the user. A conventional lease contract does not distinguish between the nature of these liabilities
and places all liabilities on the user of the asset, which is contradictory to Islamic Shariah. Under
Ijarah, all ownership-related risks lie with the Bank while all usage related risks lie with the user,
thus making the Lessor the true owner of the asset and making the income generated through the
contract permissible (Halal) for the Bank.
Continuation of lease rentals in case of total loss or theft of vehicle
If the leased vehicle is stolen or completely destroyed, the conventional leasing company
continues charging the lease rent till the settlement of the Insurance claim. Under the Islamic
system, rent is consideration for usage of the leased asset, and if the asset has been stolen or
destroyed, the concept of rental becomes void. As such, in the above-mentioned eventualities,
Meezan bank does not charge the lease rental.
Takaful instead of Insurance
Legally (in accordance to Pakistans Law and Regulations), it is required for all leasing entities
to insure the leased assets. As such, Meezan Bank insures its leased assets. Meezan Bank insures
its assets through Takaful only, which is the Islamic product for insurance.
Permissibility for Penalty of Late Payment of Rent under Islamic
Shariah
In most contemporary financial leases, an extra monetary amount is charged, in their income, if
the rent is not paid on time. This extra amount is the considered as Riba and is Haram. Under
Ijarah, the Lessee may be asked to undertake, that if he fails to pay rent on its due date, he will
pay certain amount to a charity, which will be administered through the Islamic Bank. For this
purpose, the bank maintains a charity fund where such amounts may be credited and disbursed
for charitable purpose.
How to get a car through Car Ijarah

To apply for Meezan Banks Car Ijarah, fill out a customer application form (available at any
Branch), attach the required documents and get your financing approved in minimal working
time.

Required Documents

Application form duly filled and signed by the applicant

Copy of recent pay slip/certificate showing For Salaried

individuals.

Business Proof - such as bank certificate confirming

proprietorship, NTN, business Association letter or tax
return etc. is required - For businessman.

Copy of last six months bank statements

One recent photograph.

Specimen Signature card preferably on banks prescribed

format

Processing Charges

Type of Charges Salaried B

Processing Charges - Up Front PKR 2,500 P

FED* on Processing Charges @ 13% to 16% PKR 325@13% P

Property Valuation Charges At Actual A

Income Estimation Charges At Actual A

 Documentation Charges At Actual A

Old Vehicle Valuation Charges PKR 2,000 P

Dubai Islamic bank:

Features

Tracker Device & Monitoring

Lowest Insurance/Takaful Rates

Guaranteed Lowest Insurance/Takaful rates compared to any other Bank.

Payment Advance Booking Cases

No monthly rental payments will be made by the customer before delivery of the car in Advance
Booking cases.

Monthly Rental
Competitive and affordable monthly rentals as per industry standards.

Financing Amount
DIBPL will finance up to 85% of the car value.
Minimum financing: Rs.100,000
Maximum financing: Rs. 5,000,000

Islamic Product
We provide fast and hassle free processing of application through a Sharia compliant process.

Flexibility
New or Used Cars.

Local or Imported/Re-conditioned Cars.

Payment plan with tenure options ranging from 1-7 years.

Ready Delivery and Advance Booking.

Income clubbing option.

Up to 9 year old vehicle can be financed

Eligibility

Minimum Age at the time of Maximum Age at the time of Finance

Customer Class
Application Maturity
Salaried 21 Years 60 Years
Self Employed
21 Years 65 Years
Professional
Self Employed
21 Years 65 Years
Businessman

You are Eligible for Dubai Islamic Auto Finance if:

Your Monthly Net Income is Rs.25,000
You Have Been Working For
Salaried 3 Months
Self Employed Professional 6 Months
Self Employed Businessman 12 Months

Documents Required

Copy of primary applicants CNIC.

 Copy of co-applicants CNIC (if applicable).

2 passport size photographs.

Latest salary slip.

6 months Bank statement (if applicable).

Bank certificate (if applicable).

Conventional bank auto finance procedure & requirements:

Alfalah Auto Loan

Be in the drivers seat when buying the perfect car. Alfalah Auto Loan lets you control your
payment plan.
Residual Value option to lower your instalment
Option to defer insurance and Registration charges
Zero charges on Car Replacement option
Quick loan processing

Basic Features and Benefits

You can choose a car that is new, used or imported
Affordable markup rates to choose from-fixed and variable
Minimum documentation and hassle free quick processing
Financing available up to 7 years tenure
Enjoy special comprehensive insurance rates
Zero charges on Car Replacement
Balloon payment option

Product offerings

Residual Value (RV) Product

Under RV product, Bank Alfalah provides convenience to its customers to pay a lump sum
balloon payment (up to 50% of Financing Value) at the end of the financing tenure for increased
affordability and convenience of repayments.
This product variant provides convenience to customers to own one of the below mentioned
vehicles on lowest possible installments.
Toyota (Brands Corolla, Hilux, and Fortuner)
Honda (Brands City and Civic)
Suzuki (Brands Cultus, Swift and WagonR)
Available for the residents of Islamabad, Lahore, Multan, Faisalabad and Karachi only.

Deferred Insurance & Registration

Bank Alfalah is pioneer Bank to offer Deferred Insurance and Registration product. Through this
offering, Bank facilitates its customers to pay Insurance and Registration Charges in installments
during the tenor of the financing/leasing instead of upfront in down payment. Hence lowest
possible down payment increase customers affordability and also facilitates customers in
owning a high value/bigger vehicle.

Vehicle Replacement Option

Under this option, Customers can easily purchase new vehicle and adjust their vehicles with a
new vehicle without any pre adjustment penalty.

Option for Fixed and Variable rate

Bank Alfalah provides its Customer with an option to choose fixed or variable rate of
financing/leasing.

Option for Balloon Payment

Bank Alfalah offers its customers to lower their installments by adjusting their principal with a
balloon payment twice in tenure of the loan. Each balloon payment equals to 6 equal monthly
installments.

Documents Required

Basic Documentation:

Complete application form with customers signatures

 Copy of CNIC/NICOP/POC/Smart ID
SBP undertaking on Loans availed and monthly
liabilities
2 recent photographs

Documentation as per profession:

Salaried Individual: Salary Slip/Salary Letter, 06 months Bank Statement
SEB/SEP: 06 months Bank Statement or Income verification report
Agriculturist: Fard/Mukhtar e Kar/Ownership, Certificate, 06 months
Bank Statement or Income verification report
Rental Income: Rental Agreement (should be valid for next 3 months),
Title Document, 06 Months Bank Statement
Foreign Remittance: Income/Job Proof, Remitter Passport (valid visa for
at least 03 months), 06 months Remittance Slips or 06 months Bank Statement of Remit tee

Eligibility
You are a Pakistani National Identity Card Holder
For Salaried individual you should be between 21 and 60 years of age, for Self
Employed/Other categories you should be between 21 To 65 years of age (Loan maturity to
fall in the same age bracket)
Salaried Individuals including Government / Semi Government employees
and Employees of Armed Forces
Professionals (Chartered Accountants, Consultants, Doctors, etc.)
Self Employed Individuals, Proprietorships, Partners, Family Concern
Business
Landlords, Housewives & Retired Individuals with consistent Rental
Income/Foreign Remittances.
 You should have income from any of the following sources:
Employment (Permanent/Contractual)
Business (Partnership/Proprietorship)
Rental Income
Agricultural Income
Remittances from Abroad
Co-Borrowers Income (Co-Borrower Case)

Markup rates

Askari bank
Ask4Car

Financing for new, used and imported vehicles.

 Features Details

Product Type: Financing for new, used and imported vehicles

Charges: As per Schedule of Bank Charges

Insurance: Built in Insurance & Tracker

Equity New vehicles: minimum 20%

Requirement: Imported vehicles: minimum 30% of the FSV
of the vehicle
Used vehicles: minimum 25% of the FSV

Co-borrower: Parents, spouse and son can be considered as co-

borrower. Brother/ sister can be considered if other
options are not available and provided they are
employed/self-employed

Electronics Mandatory for all applicants including co-

Credit borrowers
Information Debt burden inclusive of all existing and
Bureau (ECIB) proposed liabilities shall not exceed 50% of net
& Debt Burden disposable income
Ratio (DBR):

Mark Up:

Segment Annual Mark-up

Armed Forces: 12 months Kibor + 1.5% (upto 3 years)
12 months Kibor + 2% (more than 3
years)

Branch Customers 12 months Kibor + 3% (upto 3 years)

(salaried): 12 months Kibor + 3.5% (more than 3
years)

Branch Customers 12 months Kibor + 3.5% (upto 3 years)

(SEB/SEP): 12 months Kibor + 4% (more than 3
years)

Non Branch Customers 12 months Kibor + 4%

(salaried):

Non Branch Customers 12 months Kibor + 4.5%

(SEB/SEP):

Used/Imported Vehicles: 12 months Kibor + 5%

Financing Tenor:

Type Tenor

New: 1 to 7 years

Used: Used vehicles should not be older than 7 years and

the age of the vehicle should not exceed 10 years at
the time of maturity of loan

Imported: In case of imported vehicles, the bank shall not

finance the vehicles older than 7 years
Minimum Income:

Minimum Income
Category Relation/Service Length
Requirement

All Salaried Rs. 25,000 Permanent employees

Armed Forces Rs. 25,000 Commissioned officers

AKBL Branch Rs. 25,000 3 months salary

Customers relationship with AKBL
(salaried)

AKBL Branch Rs. 50,000 6 months account

Customers relationship with AKBL
(SEB/SEP)

Non Branch Rs. 40,000 1 year continuous service

Customers length
(salaried)

Non Branch Rs. 75,000 1 year in current business

Customers
(SEB/SEP)

Government Sector Rs. 25,000 BPS 14 or above

permanent employees, 6
months service length
Individuals with Rs. 75,000 Nil
Rental Income