The features of 'Islami Auto Finance' for Used/ Re-conditioned Vehicles are:

Auto Financing facility forUsed/ Re-conditioned Vehicles
Tenure of Auto Financing1 to 7 years
Customer EquityMinimum 15% to Maximum 90%
Financing AmountMinimum Rs. 250,000/-
Maximum Rs. 10,000,000/-
(Cases above Financing Amount of Rs. 10,000,000/- will be considered but will be treated as Deviation cases)
Age of Used Vehicles (Determined from Year of Manufacturing)
Not to be more than 12 years old at the time of Maturity and 9 years old at the time of financing
Processing Charges Application Fees (Upfront): Rs. 1,200/- per car (Inclusive of FED)


1. For Financing Up to Rs. 1 million:
Documentation & Processing Fees (Prior to Disbursement): Up to Rs. 3,500/- per car (Inclusive of FED)
Valuation Charges: Up to Rs. 7,500/-

2. For Financing Above Rs. 1 million but less than Rs. 10 million:
Documentation & Processing Fees (Prior to Disbursement): Up to Rs. 4,400/- per car (Inclusive of FED)
Valuation Charges: Up to Rs. 7,500/-

3. For Financing Above Rs. 10 million but less than Rs. 50 million:
Documentation & Processing Fees (Prior to Disbursement): Up to Rs. 15,600/- per car (Inclusive of FED)
Valuation Charges: At actual
Tracker Installation
Tracker installation is Mandatory for All Vehicles and tracker shall be installed by BankIslami Pakistan Limited.
TakafulRanging from 2% to 2.9% (Rate may vary for special vehicles)
 

* 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, the 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

  • Approach BIPL and identify the vehicle to be acquired on Diminishing Musharakah basis under Auto Finance Facility
  • Fill in the Application Form and submit the required documents
  • BankIslami will process the application and approve or reject the credit application, depending on customer's eligibility on 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.
  • 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 4% (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 may vary at the time of delivery of vehicle.

• Takaful (Insurance) Rates for all New Vehicle: Ranging from 2% to 2.9% (with Tracker)

• For high net worth vehicles like Mercedes, BMW, Audi, Range Rover, Land Cruiser etc. rates shall be determined on case to case basis.

• Installation of vehicle tracking device is mandatory for all vehicles.

Tracker Installation charges:

One Time Charges: Rs.12,500/- (Not Upfront, to be collected with 1st Rental)

Monthly Tracker charges: Rs. 1,100/- (Included in Monthly Rental)

• One time charges are included in 1st Rental, not accounted for.

• Variable Financing Rate (To be revised on every Anniversary of Financing)

• Rate may vary in case of Deviation from Standard Auto policy

• Waiver of Prepayment penalty charges in case of Financing of 2nd facility

• Preferred Financing rates for Existing BankIslami's customer*

(*Terms & Conditions apply)

CitizenshipPakistani
IncomeMinimum Rs. 40,000 to 50,000 (Net Disposable)
Age LimitFor Salaried:
Minimum 21 Year (At the time of Booking/ Financing)
Maximum 60 Years (At the time of Maturity)
For Businessmen/ Self Employed Professionals (SEP's)
Minimum 21 Years (At the time of Booking/ Financing)
Maximum 65 Years (At the time of Maturity)

Documents Required:

  • Salaried Individuals
    • 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
  • Businessmen/ Self Employed Professionals (SEP's)
    • Application Form properly filled and signed by customer
    • SBP undertaking properly filled and signed by customer
    • 1 Year Bank Statement, Where Salary Credits (Original / stamped & signed by bank)
    • Proprietorship letter from Bank / Partnership Deed / Proof of shareholding, as the case may be
    • 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
    • Copy of NTN and copy of Income Tax Returns or Any Authentic Business proof
    • NOC from partners or other shareholders, as the case may be

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 kinds 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 its share to customer on rental basis under separate lease agreement wherein customer undertakes that if he/ she fails to pay rent on due date, he/ she will pay certain amount to charity through BankIslami. The charity is utilized by BankIslami for charitable purposes and is not included 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/ she 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 UBL Insurers (Pvt.) Limited/ Adamjee Insurance Company Ltd- WTO/ Jubilee General- Window Takaful/ TPL Direct Insurance Ltd- WTO

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. 1. Outstanding Unit price
    2. 2. Early Purchase additional price i.e. 5% to 8% of the outstanding unit price
    3. 3. The uncovered portion of the Takaful premium paid for the year
    4. 4. The unrecoverable portion of Registration charges
    5. 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.

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. Which mode of Financing is currently being used by 'Islami Auto Finance'?

  • The mode of Financing currently used by 'Islami Auto Finance' is 'Diminishing Musharakah' mode.

Q. Who can apply for Auto Financing facility?

  • 1. Salaried Employees
    2. Self-Employed Professionals (SEP's)
    3. Businessmen

Q. What is the minimum and maximum Financing limit on Auto Finance?

  • The Financing limit on Islami Auto Finance is:
    • Minimum Financing Amount: Rs. 250,000/-
    • Maximum Financing Amount: Rs. 10,000,000/-

Q. What is the minimum and maximum Age limit at which one can apply for Auto Finance facility?

  • For Salaried professionals:
    • Minimum Age limit: 21 years (At the Time of Booking/ Financing)
    • Maximum Age limit: 60 years (At the Time of Maturity)

    For Businessmen/ Self Employed Professionals (SEP's):
    • Minimum Age limit: 21 years (At the Time of Booking/ Financing)
    • Maximum Age limit: 65 years (At the Time of Maturity)

Q. What is the Customer's Contribution for Auto Finance facility?

  • The Customer can contribute a minimum of 15% Customer equity up to a maximum of 90%

Q. What is the Financing Tenure for Auto Finance?

  • The Tenure for availing Auto Finance facility is from 1 year to 7 years.

Q. What is the Age of Vehicle for financing Used Vehicle?

  • Not to be more than 12 years old at the time of Maturity and 9 years old at the time of Financing.

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

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