Documents Required:

  • Businessmen
    • Application Form properly filled and signed by customer
    • SBP undertaking properly filled and signed by customer
    • 6 Month’s Bank Statement, Where Salary Credits (Original / stamped & signed by bank)
    • Current Salary Slip
    • Signature Specimen Form
    • 1 Year Employment Proof
    • Clear and Visible Copy of CNIC
    • 2 Recent Photograph (passport size)
    • Processing Cheque Rs. 1,200/- drawn on the bank of which statement is provided
    • NOC from partners or other shareholders, as the case may be
  • Salaried
    • Application Form properly filled and signed by customer
    • SBP undertaking properly filled and signed by customer
    • 6 Month’s Bank Statement, Where Salary Credits (Original / stamped & signed by bank)
    • Current Salary Slip
    • Signature Specimen Form
    • 1 Year Employment Proof
    • Clear and Visible Copy of CNIC
    • 2 Recent Photograph (passport size)
    • Processing Cheque Rs. 1,200/- drawn on the bank of which statement is provided
    • NOC from partners or other shareholders, as the case may be

Just point your finger at the Car of your choice and we'll help you buy it.

Auto Financing facility forNew/ Used/ Re-conditioned Vehicles
Tenure of Auto Financing1 to 7 years
Customer Equity15% to 90%
Processing ChargesRs. 4,700/- (Rs. 1,200 Pre-Processing is part of the Rs. 4,700/- Amount for the first time)
Tracker Installation
Tracker installation is Mandatory for All Vehicles and tracker shall be installed by BankIslami Pakistan Limited.
Takaful2.9%*
 

* Rate may vary for special vehicles

Islami Auto Finance facility is based on Diminishing Musharakah under Shirkat-ul-Milk arrangement. Under this joint partnership agreement, BIPL's share in vehicle is represented by Musharakah units. The Bank will rent out its share in vehicle to you in exchange for periodical rents claimed. In addition to periodical rental payment, you will purchase BIPL's share (Musharakah units) on a periodical basis. Upon purchase of all Musharakah units, you will become the sole owner of the vehicle.

Concept of DM based Auto Financing:

Diminishing Musharakah (DM) is a partnership transaction in which the partners agree to terminate Shirkat (partnership) gradually by means of purchase of one partner's share by other partner.

Under Diminishing Musharakah financing, a bank and its client participate in the ownership of an asset on the basis of 'Shirkat-ul-Milk' (i.e. Joint ownership)

A DM based auto financing transaction comprises of mainly following three steps:

  • Participation in the ownership of an asset by Bank and Client (i.e. creation of Musharakah) and dividing Islamic Bank's ownership share into a number of Musharakah units;
  • Bank rents out its share of ownership in the asset to the Client (i.e. Ijarah transaction between Islamic Bank and Client); and
  • Gradual sale of Musharakah units by Bank to the client on periodic basis and at the end of the financing tenure client becomes the sole owner of the asset.

A DM Financing is a combination of Musharakah, Ijarah and Sale transaction. Therefore, all rules pertaining to Musharakah, Ijarah and Sale transactions are applicable to a DM transaction.

All the three transactions are independent and are executed through separate contracts.

How It Works

  • You will approach BIPL and identify the vehicle to be acquired on Diminishing Musharakah basis under Auto Finance Facility
  • You will fill in the Application Form and submit the required documents
  • BankIslami will process your application and approve or reject the credit application, depending on how you fit the bank's risk criteria
  • Once the application is approved, you will sign an Undertaking to Musharakah whereby, you will undertake to formalize Shirkat-ul-Milk Agreement and execute other transaction documents after arrival of Musharakah Asset (Vehicle).
  • After Undertaking to Musharakah, Booking of Vehicle is made by the Bank at the dealer
  • After the vehicle arrives at the dealer and is purchased by the Bank, Part payment/ Full payment to dealer will be made for booking / purchase of Vehicle and you will sign Shirkat-ul-Milk Agreement and Payment Agreement. You will also sign an 'Undertaking to Purchase Musharakah Units', the Bank will rent out its ownership share in the vehicle to you against periodic rental payments.In case of Financing of Used vehicles, you will sign an Agency Agreement along with Shirkat-ul-Milk Agreement, Payment Agreement & Undertaking to Purchase Musharakah Units
  • Being joint owner of the vehicle, principally Bank and Customer are liable to share the expenses like registration, Takaful cost etc. However as Bank pays the total expenses, therefore, such expenses are accounted for while determining the rental amount
  • Withholding Tax/ Advance Income Tax (On Cost) will be borne by BIPL, as Title of the Vehicle is in BIPL's name
  • Advance to Financing Tax will be at 3% (or whatever the rate may be changed to by the Govt of Pakistan) from Non-filers at the time of agreement.
  • On periodic basis, you will purchase BIPL share in units, and at the end of the transaction tenure, you will become the sole owner of the Vehicle
  • In case, you wish to terminate the Agreement before the agreed period, you will have an option to buy the vehicle on the agreed buy-out price given in the Undertaking to Purchase Musharakah Units

Note: This tentative installment amount is for immediate delivery


Takaful (Insurance) Rates for all New Vehicle:

2.9% (with Tracker)

Note:

For high net worth vehicles like Mercedes, BMW, Audi, Range

Rover, Land Cruiser etc. Takaful (insurance) rates shall be determined on case to case basis.

Installation of vehicle tracking device is mandatory for all vehicles.

Tracker Installation charges Rs.15,000/- (One Time)

CitizenshipPakistani
CitiesKarachi, Lahore and Islamabad/Rawalpindi
IncomeMinimum Rs. 40,000 to 50,000 (Net Disposable)
Processing Charges Rs. 4,700/- (Rs. 1,200 Pre-Processing is part of the Rs. 4,700/- Amount for the first time)
Age LimitFor Salaried:
Minimum 21 Year (at the time of Maturity)
Maximum 60 Years (at the time of Maturity)
For Self employed:
Minimum 21 Years (at the time of Maturity)
Maximum 65 Years (at the time of Maturity)

Q. At what point will I be obliged to start making the Monthly payment?

  • The Monthly payment will commence from the date on which the Vehicle will be delivered to the client, no matter whether the Customer has started using it or not.

Q. Will the rental differ for different phases during the Financing period?

  • The rental will be revised on every anniversary of Financing as per agreed formula mentioned in Payment Agreement.

Q. What are the rights and liabilities of the Bank and the customer?

  • As BankIslami and Customer are the joint owner of the asset, therefore, both are liable to bear all kind of loss or damage to the vehicle as per their ownership ratio in the asset unless the loss occurred due to the negligence of either party.

Q. After expiry of the Financing period, can the vehicle be transferred to me?

  • After the Gradual sale of Musharakah units by Bank to the client on periodic basis, you become the sole owner of the asset at the end of the financing tenure.

Q. Is there a penalty for late payment of rent?

  • The Bank gives it share to customer on rental basis under separate lease agreement wherein customer undertakes that if he fails to pay rent on due date, he will pay certain amount to charity through BankIslami. The charity is utilized by BankIslami for charitable purposes and does not include in the income of the bank.

Q. What happens if the Financed Vehicle stops functioning?

  • This is similar to loss or theft of the asset. If the Vehicle has totally lost the function and no repair is possible, BankIslami is bound to terminate the partnership on the day on which such loss has occurred. However, if the loss is caused by misuse or negligence on part of the Customer, he will be liable to compensate the bank for the market value of the vehicle, as it was immediately prior to the loss.

Q. If insurance is prohibited in Islam, how does BankIslami get its assets insured?

  • BankIslami has arranged to have all of its vehicles insured under Takaful, the Shariah Compliant substitute of insurance.

Q. Which company covers the Insurance amount of the vehicle?

  • Takaful coverage is provided by Pak Qatar Takaful/ EFU Takaful/ TDI Takaful

Q. How much will I be charged if I choose to avail the premature payment option?

  • In case of Premature termination, the purchase price will be calculated as follows:
    1. Outstanding Unit price
    2. Early Purchase additional price i.e. 5% of the outstanding unit price
    3. The uncovered portion of the Takaful premium paid for the year.
    4. The unrecoverable portion of Registration charges
    5. Tracker charges (if applicable)

Q. Which models are being offered by Bank for Auto Financing?

  • All models which are locally manufactured and also Imported models which are Not more than 12 years old at the time of Maturity and 9 years old at the time of Financing.

Q. Does Auto Financing contract contain any hidden charges?

  • The Auto Financing contract provides details of all charges taken in monthly payments. Other than defined in Auto Financing contract, there are no hidden or extra charges additionally taken by BankIslami

Q. How is Auto Finance different in BankIslami as compared to other Conventional Banks or Leasing Companies?

  • Conventional Lease
    DM based Auto Financing
    Commencement: Commencement:
    Lease commences the day price is paid by the lessor, whether the lessee has taken delivery of the asset or not. At BankIslami, Bank and customer jointly purchase the vehicle and after acquisition Bank gives its share in the vehicle to the customer on rent. According to Shariah, rent is charged after the customer has taken delivery of the asset, not from the day the price has been paid.
    Liabilities of the Parties in case of Loss to the Asset Liabilities of the Parties in case of Loss to the Asset
    Asset Under conventional Auto Leasing, the customer bears all kinds of loss or damage to the vehicle, whether the loss caused due to his negligence or not. As BankIslami and Customer are the joint owner of asset, therefore, both are liable to bear all kind of loss or damage to the vehicle as per their ownership ratio in the assest unless the loss occured due to the negligence of either party.
    In case of total loss, any short fall in Takaful/Insurance claim has to be borne by the customer to compensate the total outstanding amount of the bank. In case of total loss, any short fall in Takaful/Insurance claim shall be borne both by the bank and customer as per their ownership share in the asset at the time of loss.
    All expenses like registration charges, insurance charges etc. are paid by the lessee. Being joint owner of the vehicle, principally Bank and Customer are liable to share the expenses like registration, takaful cost etc. However as Bank pays the total expenses, therefore, such expenses are accounted for while determining the rental amount.
    Penalty on Late Payment: Penalty on Late Payment:
    Penalty charges exist on late payment. These are taken as income. Bank gives it share to customer on rental basis under separate lease agreement wherein customer undertakes that if he fails to pay rent on due date, he will pay certain amount to charity through Bankislami. The charity is utilized by Bankislami for charitable purposes and does not include in the income of the bank.
    Termination of Lease Termination of Lease
    Lessor has power to terminate lease unilateral without any reason. Either party can terminate the lease contract as per the terms of the agreement.