halal loans

[rio]

do they really work?
do you know anyone who does them.
just to improve my konwledge of the subject

[bender]

do they really work?
do you know anyone who does them.
just to improve my konwledge of the subject


Try doing a search on Google? I don't know what a Halal loan is, but I'm guesing it's a loan that you don't pay interest on because earning interest is illegal in the Koran or something.

[mr ajnabi]

do they really work?
do you know anyone who does them.
just to improve my konwledge of the subject


:( sorry id help you out ' but i dont know much about halal loans and what they offer but nevermind you can search islamic bank and see what they have got to say.

[miss_qupid]

most banks do em, with shariah...



HSBC
TSB

[rio]

do they,
then why doenst everyone get one whod ant to pay interest

also what does the bank get out of it if they dont charge interest its like rent out cars but not charging pppl

[bender]

do they,
then why doenst everyone get one whod ant to pay interest

also what does the bank get out of it if they dont charge interest its like rent out cars but not charging pppl


From the Economist magazine:

Britain's first Islamic bank gets official approval

THE scriptural advice is clear: banking will not get you into the Almighty's good books. All three of the Abrahamic religions frown on usury. But while most Christians and Jews long ago found ways of squaring the needs of their businesses with the demands of their faith, many Muslims still believe that charging or paying interest is wrong.

Until recently this meant that the devout were excluded from British banks, which all pay interest on deposits and charge it on loans. Middle Eastern firms developed sharia-approved financial services in the 1970s, and the global market is now worth about $200 billion, according to Permal, a finance house involved in the sector. Islamic mortgages have been available in Britain (from the Ahli United Bank) since 1997, and HSBC launched a halal mortgage in 2003.


Last week regulators granted a licence to Britain's first sharia-compliant bank, the Islamic Bank of Britain. It plans to offer Islamic versions of traditional services—deposit accounts, personal loans and mortgages—in Muslim areas of Leicester, Birmingham and London, although the bank will be open to anyone. “We'll compete with all the major banks up and down the high street,” says Michael Hanlon, the managing director.

So how will it work? On top of banning interest, the Koran prohibits “making money from money” and investment in sectors considered immoral. Deposit accounts will operate rather like unit trusts, with funds invested on the depositor's behalf and a share of the profits replacing interest payments. A sharia committee will make sure that no money goes to questionable outfits involved in, for example, pornography or alcohol—or usurious, non-Islamic banking. Mortgages and loans will use a “hire-purchase” scheme whereby the bank buys goods on the customer's behalf. He then pays the bank a series of instalments until the cost, plus a profit for the bank, has been met.

Some of this may seem like hair-splitting—for example, a normal interest-bearing loan is, in effect, the same as the bank's hire-purchase system—but the distinction matters to many. Mr Hanlon points out that those among Britain's 1.8m Muslims who were previously unwilling to take out a mortgage will now be able to buy a house. Even religious demands create their own supply.

[ElDiablo]

its all a matter of debate. Loans is a simple thing tho, as long as one doesnt add interest on top its fine.

Mortgages is a whole different story. some are against it, some not. I say, we have no bloody choice these days.

[nass]

Al-Ansaar is the only place for Halal mortgages.

[larki_jatti]

yeah they work, theres a couple places you could take out interest free loans.
people usually say they have no choice when it comes to interest, but i think theres always a choice if you look for one. i know lots of people who found halal ways without paying any interest. andthe one thing that allah declared war against in the quran was interest and the people that take/pay it.

[HERCS]

i think its just a renaming of "interest" into "profit"

[paulie walnuts]

yeah they work, theres a couple places you could take out interest free loans.
people usually say they have no choice when it comes to interest, but i think theres always a choice if you look for one. i know lots of people who found halal ways without paying any interest. andthe one thing that allah declared war against in the quran was interest and the people that take/pay it.
can Allah really be outsmarted this easily?

is he so stupid that he won't realize that interest is being bundled in with the principal or being rebadged as a premium fee?

will whiskey become halal if you start calling it apple juice?

[reaz]

i think its just a renaming of "interest" into "profit"


yup. that's what i thought as well.

besides the translation of Quran is that the poor may not be given loans.

normal people may be given loans with an upper boundary of 100% of the principal.

http://www.free-minds.org/shah5.htm

[reaz]

can Allah really be outsmarted this easily?

is he so stupid that he won't realize that interest is being bundled in with the principal or being rebadged as a premium fee?

will whiskey become halal if you start calling it apple juice?


this is why i dont buy into the whole halal loan business.

besides someone claimed people cant make money off of money. how dumb is that? if you dont reinvest in your own business how are you going to earn profits?

[mp3]

Al-Ansaar is the only place for Halal mortgages.

What is Al-Ansaar

[mp3]

yeah they work, theres a couple places you could take out interest free loans.
people usually say they have no choice when it comes to interest, but i think theres always a choice if you look for one. i know lots of people who found halal ways without paying any interest. andthe one thing that allah declared war against in the quran was interest and the people that take/pay it.


Which few places offer interest free loans. I have looked around but haven' t seen this. how do they secure there money. Is it one of those they buy the property and you have to pay rent as well as part of the loan. As in that case the rent is the interest wrapped up in a way to make it look different and realistically it is the same thing.

[reaz]

Which few places offer interest free loans. I have looked around but haven' t seen this. how do they secure there money. Is it one of those they buy the property and you have to pay rent as well as part of the loan. As in that case the rent is the interest wrapped up in a way to make it look different and realistically it is the same thing.


that's exactly what it is. I checked what HSBC offers and that is exactly what it is. pay half the money (or the asking price of the property) now and pay rent. that's interest!

banks live on profit. however, they can call interest other things.

[larki_jatti]

can Allah really be outsmarted this easily?

is he so stupid that he won't realize that interest is being bundled in with the principal or being rebadged as a premium fee?

will whiskey become halal if you start calling it apple juice?
no, calling something by another name wont make it halal. :| I probably should have said rib'aa instead of interest, and then there wouldnt have been that confusion.

anyways whatever

[Cunard]

if these loans were truely interest free....every desi and jew would be jumping on them

[ElDiablo]

there is no such thing as an interest-free loan.

like someone said, if you called alcohol apple juice, would that make alcohol halal?

errm yes there is

you could always ask a relative to lend you money and pay them back later or in installments without any form of interest on top.

[MolviCorleone]

can Allah really be outsmarted this easily?

is he so stupid that he won't realize that interest is being bundled in with the principal or being rebadged as a premium fee?

will whiskey become halal if you start calling it apple juice?

Firstly , Ijara is based on a “lease-to-own” concept and is interest-free making it compliant with the Riba provision of Shariah. In an Ijara based transaction, you identify the property you wish to buy and agree to the purchase price with the seller. The bank enters into a “Promise to Purchase” agreement with you for an amount equal to the original purchase price and purchases the property. At the same time, you enter into a lease agreement with the bank which details your rights to occupy the property. You make monthly payments to the bank and a portion of the payment is applied toward the purchase of the property with the remainder paid to the bank as rent. Once the purchase price is paid in full, rental payments cease and ownership of the property is transferred to you.

Musharaka is based on a “shared ownership” concept. In a Musharaka based mortgage transaction, you identify the property you wish to buy and agree to a purchase price with the seller. The bank buys the property and leases it to you (similiar to Ijara). Your first payment is your initial contribution (deposit), in a Musharaka arrangement this amount will become your initial `Share` of the property. As the mortgage term progresses, the capital portion of your monthly repayment to the bank will add to your percentage share of the property. When you make your last payment at the end of the mortgage term, you would have purchased 100% share of your home.

[reaz]

errm yes there is

you could always ask a relative to lend you money and pay them back later or in installments without any form of interest on top.

yea. but the OP was asking about banks offering halal loans. not borrowing money from family. some times relatives cant lend you the amount you need.

[MolviCorleone]

yea. but the OP was asking about banks offering halal loans. not borrowing money from family. some times relatives cant lend you the amount you need.

yeh, actually my mums done this before even when we didnt need money....it was a way to TEST certain ppl and see how far they are willing to go to help us out......most are all talk. My mamu wrote a cheque instantly....good man. The dads side are all talk. Tell you theyre there for you, but really arent.

[daisies]

Firstly , Ijara is based on a “lease-to-own” concept and is interest-free making it compliant with the Riba provision of Shariah. In an Ijara based transaction, you identify the property you wish to buy and agree to the purchase price with the seller. The bank enters into a “Promise to Purchase” agreement with you for an amount equal to the original purchase price and purchases the property. At the same time, you enter into a lease agreement with the bank which details your rights to occupy the property. You make monthly payments to the bank and a portion of the payment is applied toward the purchase of the property with the remainder paid to the bank as rent. Once the purchase price is paid in full, rental payments cease and ownership of the property is transferred to you.

Musharaka is based on a “shared ownership” concept. In a Musharaka based mortgage transaction, you identify the property you wish to buy and agree to a purchase price with the seller. The bank buys the property and leases it to you (similiar to Ijara). Your first payment is your initial contribution (deposit), in a Musharaka arrangement this amount will become your initial `Share` of the property. As the mortgage term progresses, the capital portion of your monthly repayment to the bank will add to your percentage share of the property. When you make your last payment at the end of the mortgage term, you would have purchased 100% share of your home.

Agreed ^. These are not ideal methods for Islamic Financing but are still permissable, as agreed by the consensus of ulema. And all of you 'enlightened' people (most of whom clearly don't know what you're talking about) seem to think this debate is somehow unchartered territory.....like yeah omg, you are soooo freakin' clever!

Also, why is everyone confusing interest with profit?

Trade and profit making is permissable...obviously. :rolleyes:

Riba (usury) is not, it is a system whereby those with money take advantage of those without such capital.

What differentiates Ijara, for example with an interest-based loan is that it is essentially a rental contract in which one party, the leaseholder (al-mustajir), pays for the temporary use of a house. The contract must stipulate the hire-charge, the period of hire and the location in which the thing hired is to be used. The owner (al-malik) of the rented article is liable for any damage to the article. i.e. The bank is responsible for the house, much like rental.


However, Usury is the most pernicious destroyer of equity in the market-place and is the gateway to social imbalance and oppression and the proliferation of other malpractices. However innocuous a usurious transaction may seem, there is always an underlying element of gain for one party at the expense of loss for the other. Whereas, clearly in Ijara and especially Mushraka, there is joint ownership and liability, where both parties profit and share the risk.

For usurors, Ibn Rushd states, they "pay out money and receive more back without performing any deed or assuming any liability".

For anyone interested, there is an interesting answer to this question posed by a Muslim who seems to also mistakenly think Islamic 'mortgages' are just a veil for sustaining usurous practices, and re-packaging so to speak.

http://www.islamic-banks-mortgages.com/The-prohibition-of-Interest-in-Islam.html

[mr ajnabi]

aaah i see.

nice post the 1 above me . :D

[daisies]

there is no such thing as an interest-free loan.

like someone said, if you called alcohol apple juice, would that make alcohol halal?

Nice analogy.

If the intoxicating chemicals are removed/minimised to the extent that they do not lead to intoxication upon consumption then yes, this is also permitted.....and funnily enough, many non-alcoholic 'champagnes' are essentially fruit juices.

If the harm(interest in this case) is extracted, then what remains is allowed.

[reaz]

wait a minute. so loans are haraam because banks take no risk?

gee whiz, what if i dont repay my loan.

[reaz]

Firstly , Ijara is based on a “lease-to-own” concept and is interest-free making it compliant with the Riba provision of Shariah. In an Ijara based transaction, you identify the property you wish to buy and agree to the purchase price with the seller. The bank enters into a “Promise to Purchase” agreement with you for an amount equal to the original purchase price and purchases the property. At the same time, you enter into a lease agreement with the bank which details your rights to occupy the property. You make monthly payments to the bank and a portion of the payment is applied toward the purchase of the property with the remainder paid to the bank as rent. Once the purchase price is paid in full, rental payments cease and ownership of the property is transferred to you.

Musharaka is based on a “shared ownership” concept. In a Musharaka based mortgage transaction, you identify the property you wish to buy and agree to a purchase price with the seller. The bank buys the property and leases it to you (similiar to Ijara). Your first payment is your initial contribution (deposit), in a Musharaka arrangement this amount will become your initial `Share` of the property. As the mortgage term progresses, the capital portion of your monthly repayment to the bank will add to your percentage share of the property. When you make your last payment at the end of the mortgage term, you would have purchased 100% share of your home.

that "rent" you're paying is what profits the bank. it's a fixed rate and it's not going towards ownership of the house. me thinks that's basically "interest".

however, the second method seems less like a mortgage. but that doesnt make sense. why would the bank give you money without making a profit?

zero % interest loans dont exist. every loan has to have a rate of return or else the bank is not going to make a profit.

[Cunard]

a portion of the payment is applied toward the purchase of the property with the remainder paid to the bank as rent.

good god...are desis in the uk that dull?

all that happened was that the words "interest" and "rent" got interchanged

instead of paying interest on your monthly payment...you end up paying rent on top of your monthly payment.....hence the bank still makes a profit on your loan

[daisies]

good god...are desis in the uk that dull?

all that happened was that the words "interest" and "rent" got interchanged

instead of paying interest on your monthly payment...you end up paying rent on top of your monthly payment.....hence the bank still makes a profit on your loan

This is the point you clearly are not getting....by you, I mean almost all of you.

The ultimate objective is not for the bank to make a loss or even break even, of course their entire business is reliant on profit - its not a bloody charity.

The point is there is a halal way to trade (hence make profit) and a haram way, Islamic financing satisfies the former criterion.

[daisies]

that "rent" you're paying is what profits the bank. it's a fixed rate and it's not going towards ownership of the house. me thinks that's basically "interest".


well 'me' is clearly not qualified to know what 'me' is blabbering on about.

That rent is exactly that, it is an agreed fixed sum of money (not variable) that is payment to the bank for their services (hence profit). The bank is still responsible for the shared liability of the increase/decrese in value of the property.


zero % interest loans dont exist. every loan has to have a rate of return or else the bank is not going to make a profit.

Why must you equate interest with the only method of profit making and trade?

There was life before capitalism you know... :rolleyes:

[paulie walnuts]

Firstly , Ijara is based on a “lease-to-own” concept and is interest-free making it compliant with the Riba provision of Shariah. In an Ijara based transaction, you identify the property you wish to buy and agree to the purchase price with the seller. The bank enters into a “Promise to Purchase” agreement with you for an amount equal to the original purchase price and purchases the property. At the same time, you enter into a lease agreement with the bank which details your rights to occupy the property. You make monthly payments to the bank and a portion of the payment is applied toward the purchase of the property with the remainder paid to the bank as rent. Once the purchase price is paid in full, rental payments cease and ownership of the property is transferred to you.

Musharaka is based on a “shared ownership” concept. In a Musharaka based mortgage transaction, you identify the property you wish to buy and agree to a purchase price with the seller. The bank buys the property and leases it to you (similiar to Ijara). Your first payment is your initial contribution (deposit), in a Musharaka arrangement this amount will become your initial `Share` of the property. As the mortgage term progresses, the capital portion of your monthly repayment to the bank will add to your percentage share of the property. When you make your last payment at the end of the mortgage term, you would have purchased 100% share of your home.uh...like i said earlier, you can repackage the interest in a number of ways using a number of different names....but no matter how you cut it, the lender receives more from the borrower than he originally paid to the borrower. do you agree or disagree?

before trying to refute what i'm saying, try to understand the most fundamental principle involved in a loan transaction: by issuing a loan, the lender a) incurs an opportunity cost on funds he would've otherwise had at his disposal (the loan principal), and b) is exposed to default risk.

without extracting a premium on the loan, the lender has nothing to gain and everything to lose.

now you tell me who on earth would give you such a loan. your mom? maybe. a particularly generous uncle? perhaps.....but a commercial bank (islamic or otherwise)? fuck no.

[reaz]

well 'me' is clearly not qualified to know what 'me' is blabbering on about.

That rent is exactly that, it is an agreed fixed sum of money (not variable) that is payment to the bank for their services (hence profit). The bank is still responsible for the shared liability of the increase/decrese in value of the property.



Why must you equate interest with the only method of profit making and trade?

There was life before capitalism you know... :rolleyes:

me is not qualified? cmon i have a brain. i am qualified enough to make a opinion. when i see a fixed positive rate of return it's risk free interest. that's what the bank is doing with you. use your common sense. what is interest? a fixed or variable (depending on the mortgage type) rate of return on money lent. the bank is lending money and in return the bank is getting more than it lent. how simple is that?

i dont need a scholar to tell me something that's so obvious to me. i am talking about profit making not interest. interest is a method of making profit. but essentially it's return on money lent.

what is the bank doing in the case of a "halal" loan? lending money. what is the muslim doing? paying that loan back but in the process is paying back more because a portion goes towards payment and the rest goes as "rent" to the bank.

that my dear, is interest.

[reaz]

This is the point you clearly are not getting....by you, I mean almost all of you.

The ultimate objective is not for the bank to make a loss or even break even, of course their entire business is reliant on profit - its not a bloody charity.

The point is there is a halal way to trade (hence make profit) and a haram way, Islamic financing satisfies the former criterion.

what's the difference? only the name has been changed. =/

you call it rent, ppl call it interest here. what made it haram here and halal there? explain this.

[Cunard]

what's the difference? only the name has been changed. =/

you call it rent, ppl call it interest here. what made it haram here and halal there? explain this.

thats what i said...but clearly i dont "get it" :p

[HeppyG]

Tesco do halal loans!

[Dutty Dutty LuV]

yeah they work, theres a couple places you could take out interest free loans.
people usually say they have no choice when it comes to interest, but i think theres always a choice if you look for one. i know lots of people who found halal ways without paying any interest. andthe one thing that allah declared war against in the quran was interest and the people that take/pay it.


my husband and I live an interest free life alhumdulilah... definitely something every muslim can do, however as sad as it is people in general are all about huge houses, two/three cars etc etc.
n if ur the typical type of graduated desi... doc, eng then these things become a must to have.

we've been living in an appartment paying rent for like four years now... always pay up credit cards so no interest accumulates on them... n usually lease a car on 0%.

Have you guys heard of ISNA, and GUIDANCE financing? i hear they also aid in interest free loans. I'm skeptical of them though, something completely dodgy about it.

N E WAYS. :D

hope everyones well, ciao
Wassalam.

[daisies]

me is not qualified? cmon i have a brain. i am qualified enough to make a opinion. when i see a fixed positive rate of return it's risk free interest. that's what the bank is doing with you. use your common sense. what is interest? a fixed or variable (depending on the mortgage type) rate of return on money lent. the bank is lending money and in return the bank is getting more than it lent. how simple is that?

Fine, but remember it is just an opinion and your definition of interest is certainly worth a double take mon ami......again not al profit making is interest, interest is only one form of profit making from the loan of money with a rate of return based on the amount lent (plus other factors) so essentially the bank are lending you money, and you are paying them back solely for their monetary loan in the form of interest....i.e. money making money for doing absolutely nothing.





i dont need a scholar to tell me something that's so obvious to me. i am talking about profit making not interest. interest is a method of making profit. but essentially it's return on money lent.

So what's your point then?

Profit making = halal, interest as a method for such = haram.

How much more simpler can it get?


what is the bank doing in the case of a "halal" loan? lending money. what is the muslim doing? paying that loan back but in the process is paying back more because a portion goes towards payment and the rest goes as "rent" to the bank.

that my dear, is interest.

Again you use it synonymously as if you know what you're talking about, how endearing.

Yes my dear, the billion dollar industry that is Ilsamic financing is based upon a terrible fallacy and thank you cretins sooooo much for clearing this for us, because obviously HSBC/Lloyds TSB/Islamic Bank of Britain lenders and countless scholars are too dumb to know otherwise..... :rolleyes:



Ijara arrangements are based upon a lease-to-purchase concept while Murabaha is based upon a deferred-sale financing arrangement.

In a Murabaha type of mortgage, the lender buys the property and sells it to the borrower at a higher price (the profit) – the payments are then calculated to reflect the higher sale price being paid.

In both cases the lender purchases or co-purchases the property with the buyer....the only comparable system to this currently in the UK is if you live in a council house, you pay rent monthly and if at the end of a 12 year (?) period you wish to purchase then the rent counts as part payment towards the purchase of the house. In some Ijara schemes, the rent also constitutes as part payment, and a fixed profit is agreed beforehand.

Leasing is also a lawful method of earning income, according to Islamic law. In this method, a real assets such a machine, a car, a ship, a house, can be leased by one person (lessor) to the other (lessee) for a specific period against a specific price. The benefit and cost of the each party are clearly spelled out in the contract so as any ambiguity (Gharar) may be avoided.

Under this scheme of financing an Islamic bank purchases an asset (So it is not something from nothing, they have invested in a property and not simply just lent money i.e. sharing liability) as per specification provided by the client.

Non-payment is always risk with any loan. The property remains in possession of the lessor until the end of the term.



I really can't be bothered explaining any more, what really is irritating is the patronising attitude most of you desi know-it-alls seem to be projecting.

You don't know it all, in fact in this case, I bet you haven't even looked past RD for answers.

[reaz]

Fine, but remember it is just an opinion and your definition of interest is certainly worth a double take mon ami......again not al profit making is interest, interest is only one form of profit making from the loan of money with a rate of return based on the amount lent (plus other factors) so essentially the bank are lending you money, and you are paying them back solely for their monetary loan in the form of interest....i.e. money making money for doing absolutely nothing.






So what's your point then?

Profit making = halal, interest as a method for such = haram.

How much more simpler can it get?



Again you use it synonymously as if you know what you're talking about, how endearing.

Yes my dear, the billion dollar industry that is Ilsamic financing is based upon a terrible fallacy and thank you cretins sooooo much for clearing this for us, because obviously HSBC/Lloyds TSB/Islamic Bank of Britain lenders and countless scholars are too dumb to know otherwise..... :rolleyes:



Ijara arrangements are based upon a lease-to-purchase concept while Murabaha is based upon a deferred-sale financing arrangement.

In a Murabaha type of mortgage, the lender buys the property and sells it to the borrower at a higher price (the profit) – the payments are then calculated to reflect the higher sale price being paid.

In both cases the lender purchases or co-purchases the property with the buyer....the only comparable system to this currently in the UK is if you live in a council house, you pay rent monthly and if at the end of a 12 year (?) period you wish to purchase then the rent counts as part payment towards the purchase of the house. In some Ijara schemes, the rent also constitutes as part payment, and a fixed profit is agreed beforehand.

Leasing is also a lawful method of earning income, according to Islamic law. In this method, a real assets such a machine, a car, a ship, a house, can be leased by one person (lessor) to the other (lessee) for a specific period against a specific price. The benefit and cost of the each party are clearly spelled out in the contract so as any ambiguity (Gharar) may be avoided.

Under this scheme of financing an Islamic bank purchases an asset (So it is not something from nothing, they have invested in a property and not simply just lent money i.e. sharing liability) as per specification provided by the client.

Non-payment is always risk with any loan. The property remains in possession of the lessor until the end of the term.



I really can't be bothered explaining any more, what really is irritating is the patronising attitude most of you desi know-it-alls seem to be projecting.

You don't know it all, in fact in this case, I bet you haven't even looked past RD for answers.


i asked you several times to tell me the difference. however, all you keep telling me is that profit making is halal but interest is not. tell me what the difference is. i really want to know.

i dont claim to know it all, however i've looked past rd, and scholar websites. but i want to know your reasoning. why are they different.

this is what you said. bank is making money off of money. that's haraam. tell me how halaal loans dont do this.

normal mortgages also involve the bank purchasing the property. it's kinda like auto loans. you dont actually own the car or the home till you've paid it off. you do however retain the rights to sell it off should you be able to finance the item in whole and get your lien or mortgage title back.

have you guys ever even bought a home? do you know the process? if not i dont care how many islamic websites you've read up because you need to know how the process works in both versions (islamic and non islamic).

[reaz]

have you heard of the term foreclosure?

that's when the bank terminates the mortgager's rights to redeem his mortgaged estate. how does the bank do this? it's because the bank owns the property till the whole mortgage is paid off.

it's exactly how halal loans work except the down payment is huge and part of the mortgage payment is called rent and not interest.

[reaz]

and i also want to say that perhaps the UK version of the mortgage is different than the US. I mean the terms and legal issues behind a mortgage. which is why we could never converge on the issue.

[reaz]

I guess everyone sings the same tune.

Name: Noor
Question: Are there any lawful (halal) loans? Thanks
Answer: My Answer: Bismi Allah al Rahman al Rahim Al Hamdu li Allah Rabb al 'Alamin wa al Salatu wa al Salamu 'ala Sayyidina Muhammad wa 'Ala 'Alihi wa Ashabihi Ajma'in Dear Br./Sr. Noor There are always Halal loans. the only Halal Loans are loans without any interest, i.e., without any increment. those you can take from your mother and other people who love and care about you. If you mean financing for business, cars homes, etc. there are a few small companies and cooperative that provide Islamic financing without interest, but that does not mean without return. No body gives you money without return except your mother. Islamic financing is normally based on contract such as sale with deferred payment, Partnership, leasing , etc. Wa Allahu A'lam Wa Alhamdu li Allah Rabbi al 'Alamin Wassalam Sincerely, Dr. Monzer Kahf


http://www.masnet.org/askimam_runsess.asp?id=134

now this concept of sale with deferred payment is exactly how conventional fixed rate mortgages work in the US. the bank owns the home till you pay it off. The interest/profit is fixed right at the start of the sale and you pay it off in portion as you progress through the year. you are given ownership rights once you've paid off the amount in full.

[scorpio_]

lol @ everyone debating the application of 1500 year-old, backward, arab finance and real estate practices to the modern world

[daisies]

lol @ everyone debating the application of 1500 year-old, backward, arab finance and real estate practices to the modern world

lol @ the sade loser who doesn't know its a multi-billion dollar booming industry in which many of the foremost international Banks are partaking.

Oh, and if you had bothered to read the thread - which I don't expect from a typical narrow-minded retarded desi, then you would have realised that these modes of finance in some form or another have been practised in Britain by the Council - very successfully might I add, particularly for people on low incomes.

Such stupidity offends me to the core of my soul, please stop!

[reaz]

I think there's some difference between the British mode of operation when it comes to mortgages. It's possible. But as far as the real estate is concerned in Texas atleast, I fail to see the difference between a conventional mortgage and a halal one.

I think that's why the two brits in this thread are criticised for being stupid. Perhaps they are just subjected to a different system. =/

[daisies]

i asked you several times to tell me the difference. however, all you keep telling me is that profit making is halal but interest is not. tell me what the difference is. i really want to know.


I feel as if I did address your point, however..

Usury is interest charged or paid on a loan (of money).
Profit is the amount received for a commodity or service in excess of the original cost.

from www.dictionary.com


this is what you said. bank is making money off of money. that's haraam. tell me how halaal loans dont do this.

In Islamic banking, the money is profit/benefit gained from an investment in a commodity or service (as above) so by investing in such there is an element if shared liability as I mentioned rather than simply giving someone a sum of x amount. So your investment/product purchased is making money....much like a landlord.


normal mortgages also involve the bank purchasing the property. it's kinda like auto loans. you dont actually own the car or the home till you've paid it off. you do however retain the rights to sell it off should you be able to finance the item in whole and get your lien or mortgage title back.

Yes, The bank loans the buyer the amount for the property and holds the rights to their title deeds until the buyer pays the equity in full plus interest.


have you guys ever even bought a home? do you know the process? if not i dont care how many islamic websites you've read up because you need to know how the process works in both versions (islamic and non islamic).

My father has purchased and rents many properties, and I have been through the process with him several times over. And technically, yes I do own a property, which my father purchased for me some time back.

The problem I find which is the most troubling with the mortgages available is the variable rate of interest - this uncertainty and fluctuation is what can be defined as 'extortion' and is the cause of many a bankrupty, particularly after sudden fdramatic changes in the economic climate e.g. Sep 11.

I don't know what its like in the US, but you will never, ever find a fixed rate mortgage for the full 20-25 year term. For me, this is the primary contributory to the need for Islamic financing.

If you are happy with conventional methods, then do as you please but I truly resent people passing their own little 'fatwas' re: halal/haram on RD.

[daisies]

i asked you several times to tell me the difference. however, all you keep telling me is that profit making is halal but interest is not. tell me what the difference is. i really want to know.


I feel as if I did address your point, however..

Usury is interest charged or paid on a loan (of money).
Profit is the amount received for a commodity or service in excess of the original cost.

from www.dictionary.com


this is what you said. bank is making money off of money. that's haraam. tell me how halaal loans dont do this.

In Islamic banking, the money is profit/benefit gained from an investment in a commodity or service (as above) so by investing in such there is an element if shared liability as I mentioned rather than simply giving someone a sum of x amount. So your investment/product purchased is making money....much like a landlord.


normal mortgages also involve the bank purchasing the property. it's kinda like auto loans. you dont actually own the car or the home till you've paid it off. you do however retain the rights to sell it off should you be able to finance the item in whole and get your lien or mortgage title back.

Yes, The bank loans the buyer the amount for the property and holds the rights to their title deeds until the buyer pays the equity in full plus interest.


have you guys ever even bought a home? do you know the process? if not i dont care how many islamic websites you've read up because you need to know how the process works in both versions (islamic and non islamic).

My father has purchased and lets many properties, and I have been through the process with him several times over. And technically, yes I do own a property, which my father purchased for me some time back.

The problem I find which is the most troubling with the mortgages available is the variable rate of interest - this uncertainty and fluctuation is what can be defined as 'extortion' and is the cause of many a bankrupty, particularly after sudden fdramatic changes in the economic climate e.g. Sep 11.

I don't know what its like in the US, but you will never, ever find a fixed rate mortgage for the full 20-25 year term. For me, this is the primary contributory to the need for Islamic financing.

If you are happy with conventional methods, then do as you please but I truly resent people passing their own little 'fatwas' re: halal/haram on RD.

[daisies]

I think there's some difference between the British mode of operation when it comes to mortgages. It's possible. But as far as the real estate is concerned in Texas atleast, I fail to see the difference between a conventional mortgage and a halal one.

I think that's why the two brits in this thread are criticised for being stupid. Perhaps they are just subjected to a different system. =/

Then that only goes to prove the sheer narrow-mindedness (hence stupidity) of the vociferous ones.

Doesn't take a genius to figure out that huge international banks have taken up this as a viable alternative for a reason i.e. its obviously not the fucking same.

Wee-tods.

[paulie walnuts]

I feel as if I did address your point, however..

Usury is interest charged or paid on a loan (of money).
Profit is the amount received for a commodity or service in excess of the original cost.

from www.dictionary.comhow does that support your argument?

interest is profit made on the sale of money.

[reaz]

Then that only goes to prove the sheer narrow-mindedness (hence stupidity) of the vociferous ones.

Doesn't take a genius to figure out that huge international banks have taken up this as a viable alternative for a reason i.e. its obviously not the fucking same.

Wee-tods.


I can make money off of stupid people. I dont see why banks wouldnt.

[reaz]

how does that support your argument?

interest is profit made on the sale of money.


This is the point I was trying to get across.



daisies: Btw, I am muslim and my interpretation of this issue is on page 1. I posted a link as well.

[reaz]

It's a multi-billion dollar industry because of idiots who'd buy anything with the word 'halal' associated with it, regardless of the FACT that the word "profit" was just used as a substitute for the word "interest".

What they call "profit" IS interest. no ANDs, IFs or BUTs about it.


Do you people even know why "interest" is looked down on in Islam? From what you people have posted, i can tell you people don't know jack. USURY is what Islam looked down on, where interest rates of 100% or 200% were charged. Usury =/= interest. Interest is the return on an investment you make ala lending to a borrower. Usury is when you charge exorbitant amounts of interest. It's unlawful in ANY civilized country, such as the US, UK or Canada.

A lot of Jews were money lenders back in the day (back during the prophet's days), and they would charge those exorbitant amounts of interest. The average person could never finish paying off the interests, let alone the amount that they really borrowed. THIS is what Islam looks down on, not what we call INTEREST today. Islam is against you sitting on your ass and collecting 100-200% returns on your money for doing nothing but ripping off poor people/people in need. It is not against you making any sorts of investments and getting returns from said investments. The prophet's first wife was a trader. He himself was one. Both of them collected returns from their investments. There really is no difference between that and what you guys look down on, i.e. interest.

It is the same thing and is based on the same concept. I have some money. I could use it in my own business and get certain returns (say 5-7%) every year. I could give it to you with 0% interest, but then I would lose 5-7% returns on that amount of money, whereas you can take my money, invest it elsewhere and get the same 5-7% returns. Do you think Islam (or any sane person) would ask you to lose your own money so somebody else can make the returns off of YOUR money while you get nothing? So, I lose these returns, while you get your returns nonetheless.

I dumbed it down for you guys a lot, so there is no reason for you guys to not get it now.

you hit the nail on the head with that 100%-200% description of interest. Thank you!

http://forums.ratedesi.com/showpost.php?p=5699225&postcount=12

I had posted the same thing earlier. But it was over looked.

[ElDiablo]

Suppose you want a car, but you have no money. You take a loan out of $30,000....you have to pay back $35,0000..thats interest. Their making a profit without any work involved.

BUT what if they decide, we'll buy this car for you, and lend it to you, you can pay us back over the course of 5 yrs and in that time you can rent it from us.
Thats business, halal business...I dont see how that=interest. They didnt make money out of 'loan' but out of the rent.

Ive seen businessmen do this, they grow old, no longer have a use for thier business but the people capable of running it dont have the money. They rent it out and allow the people running the place to pay for it over x amount of years. Its just business.

It makes sense becuase the lender has made an investment. I think i read this earlier, but it makes sense.

theres a difference, interest is making money when it has nothing to do with you. No questions asked type lending.......ijara is obviously different.....it doesnt involve renting money, it ivolves renting the property at its market rent value.

mind you Murabaha and Ijara are not ideal methods of financing in Islam. They are merely used to escape from being involved in interest, and not ideal instruments to carryout the real economic objectives of Islam. Hence, they should only be used when theres a desperate need to.

Nowadays most muslims dont give a shit and get a standard mortgage.

If i really needed to, id rather use the Ijara system than any other(obviously if i couldnt find a lender)

[Cunard]

Suppose you want a car, but you have no money. You take a loan out of $30,000....you have to pay back $35,0000..thats interest. Their making a profit without any work involved.

BUT what if they decide, we'll buy this car for you, and lend it to you, you can pay us back over the course of 5 yrs and in that time you can rent it from us.
Thats business, halal business...I dont see how that=interest. They didnt make money out of 'loan' but out of the rent.

Ive seen businessmen do this, they grow old, no longer have a use for thier business but the people capable of running it dont have the money. They rent it out and allow the people running the place to pay for it over x amount of years. Its just business.

It makes sense becuase the lender has made an investment. I think i read this earlier, but it makes sense.

theres a difference, interest is making money when it has nothing to do with you. No questions asked type lending.......ijara is obviously different.....it doesnt involve renting money, it ivolves renting the property at its market rent value.

mind you Murabaha and Ijara are not ideal methods of financing in Islam. They are merely used to escape from being involved in interest, and not ideal instruments to carryout the real economic objectives of Islam. Hence, they should only be used when theres a desperate need to.

Nowadays most muslims dont give a shit and get a standard mortgage.

If i really needed to, id rather use the Ijara system than any other(obviously if i couldnt find a lender)

so instead of paying 5 grand in interest...you end up paying 5 grand in rent

end of the day your still out 35 grand on a 30 grand car...hence why the only difference is that words have been interchanged.....the bank still profits the same



halal sausage :rofl:

[reaz]

Suppose you want a car, but you have no money. You take a loan out of $30,000....you have to pay back $35,0000..thats interest. Their making a profit without any work involved.

BUT what if they decide, we'll buy this car for you, and lend it to you, you can pay us back over the course of 5 yrs and in that time you can rent it from us.
Thats business, halal business...I dont see how that=interest. They didnt make money out of 'loan' but out of the rent.

Ive seen businessmen do this, they grow old, no longer have a use for thier business but the people capable of running it dont have the money. They rent it out and allow the people running the place to pay for it over x amount of years. Its just business.

It makes sense becuase the lender has made an investment. I think i read this earlier, but it makes sense.

theres a difference, interest is making money when it has nothing to do with you. No questions asked type lending.......ijara is obviously different.....it doesnt involve renting money, it ivolves renting the property at its market rent value.

mind you Murabaha and Ijara are not ideal methods of financing in Islam. They are merely used to escape from being involved in interest, and not ideal instruments to carryout the real economic objectives of Islam. Hence, they should only be used when theres a desperate need to.

Nowadays most muslims dont give a shit and get a standard mortgage.

If i really needed to, id rather use the Ijara system than any other(obviously if i couldnt find a lender)


here in the states when they lend you the money to buy the car.. they actually buy the car.. they hold all the rights to the car.. they are the lien holders.. should you default.. they take the car from you..

they are making money off of the money in both cases. your case as well as my case.

[reaz]

:werd:

and that's no different from how credit/loans are handled in the US or UK today. interest rates are not gonna go over that 100% limit in either country. the poor (or those with bad credit) dont get much loans because not only would they not be able to pay it back, but they would also be digging a deeper hole for themselves by borrowing what they can't repay.

what Islam preaches is no different from how the banking system is set up in the world today. just because some people try to take advantage of the naive, gullble muslims by interchanging the words "interest" and "profit" does not mean their system of "Islamic" banking is something new/revolutionary. It's the same thing, just under a new name. i'm pretty sure their rates are higher than a normal bank. so, not only do all the gullible muslims pay "interest" which they're so against, but they also pay a HIGHER interest rate than they would have, had they gone to a regular bank. talk about a double whammy!

yes. they charge you more. in all reality unless you're lucky you'll have paid more than the appreciated value at the end of the halal loan. islam wasnt meant to harm us or cause us loss but halal loans essentially do that and ppl buy into this.

[ElDiablo]

here in the states when they lend you the money to buy the car.. they actually buy the car.. they hold all the rights to the car.. they are the lien holders.. should you default.. they take the car from you..

they are making money off of the money in both cases. your case as well as my case.

then its just profit making, not interest. BUT this way you have the chance to purchase it back over time. Thats my point. In Britian they rent out council houses and after 12 yrs they give you the option to buy out the rest of the house....the rent over the previous 12 yrs becomes counts towards the purchase. Im not actually sure if ijara works like that....BUT it still isnt interest. Its still halal based on what the majority of top scholars say. As muslims we shouldnt disagree with them.

Obviously there is a risk if you dont pay them back over time.

[ElDiablo]

so instead of paying 5 grand in interest...you end up paying 5 grand in rent

end of the day your still out 35 grand on a 30 grand car...hence why the only difference is that words have been interchanged.....the bank still profits the same



halal sausage :rofl:

BUT you used that car when it wasnt yours for a long period of time...so its only fair you paid a little extra. The difference with a normal loan is the person is renting money and not the property..... renting money=interest ....renting property does not=interest.

[ElDiablo]

you (and Islamic banks) call it "profit making", everybody else calls it "interest".

when you take out that mortgage, you dont OWN the home either. you pay mortgage every month (just like in your case, they pay rent every month). that mortgage payment is just like paying rent. you pay it every month, and at the end of a certain period of time, you OWN the house.

so, how is a mortgage different from what you just mentioned?

read what i wrote in my previous post.

its renting money which is interest..ijara works differently

[reaz]

then its just profit making, not interest. BUT this way you have the chance to purchase it back over time. Thats my point. In Britian they rent out council houses and after 12 yrs they give you the option to buy out the rest of the house....the rent over the previous 12 yrs becomes counts towards the purchase. Im not actually sure if ijara works like that....BUT it still isnt interest. Its still halal based on what the majority of top scholars say. As muslims we shouldnt disagree with them.

Obviously there is a risk if you dont pay them back over time.

Well for some reason it doesnt compute. Because to me it seems the loans they sanction are using the same principles of money making. Either there is something that's not being made clear to me or the banks are making fools out of muslims. I'd hate for the latter to happen.

I understand the council system. And that's fine. But I dont get why the halal mortgage is any different than a conventional mortgage.

You claim as well as the other two british posters that the bank holds no liability in the house. However, as far as I know banks hold liability of the house because they are paying for it.

You wrote about the car loan. Well I dont know about the UK but here the banks literally own your car till you pay off the amount and that's when they mail you the real lien. Otherwise you just hold the copy of the lien.

That's why I fail to see the difference between a conventional mortgage and a halaal one. To me a halaal mortage is a conventional mortage with a huge deposit and a higher rate of return coupled with the word rent instead of interest.

[reaz]

Suppose you want a car, but you have no money. You take a loan out of $30,000....you have to pay back $35,0000..thats interest. Their making a profit without any work involved.

BUT what if they decide, we'll buy this car for you, and lend it to you, you can pay us back over the course of 5 yrs and in that time you can rent it from us.
Thats business, halal business...I dont see how that=interest. They didnt make money out of 'loan' but out of the rent.

Ive seen businessmen do this, they grow old, no longer have a use for thier business but the people capable of running it dont have the money. They rent it out and allow the people running the place to pay for it over x amount of years. Its just business.

It makes sense becuase the lender has made an investment. I think i read this earlier, but it makes sense.

theres a difference, interest is making money when it has nothing to do with you. No questions asked type lending.......ijara is obviously different.....it doesnt involve renting money, it ivolves renting the property at its market rent value.

mind you Murabaha and Ijara are not ideal methods of financing in Islam. They are merely used to escape from being involved in interest, and not ideal instruments to carryout the real economic objectives of Islam. Hence, they should only be used when theres a desperate need to.

Nowadays most muslims dont give a shit and get a standard mortgage.

If i really needed to, id rather use the Ijara system than any other(obviously if i couldnt find a lender)



I have a question to ask. Have you bought a car? with a conventional auto loan? did they keep your title or did they let you have it? the title i am referring to is the title of ownership.

When I bought a car which I am paying off at the moment, the bank kept my lien (title) and I have signed an agreement to purchase the car. So tell me, how is this different from Ijara?

[ElDiablo]

I have a question to ask. Have you bought a car? with a conventional auto loan? did they keep your title or did they let you have it? the title i am referring to is the title of ownership.

When I bought a car which I am paying off at the moment, the bank kept my lien (title) and I have signed an agreement to purchase the car. So tell me, how is this different from Ijara?

car was an example man



:p

[reaz]

car was an example man



:p

well does it matter? it's a valid example. house loans and auto loans work in exactly the same manner in the US. except both have different limits on principal.

[ElDiablo]

I have a question to ask. Have you bought a car? with a conventional auto loan? did they keep your title or did they let you have it? the title i am referring to is the title of ownership.

When I bought a car which I am paying off at the moment, the bank kept my lien (title) and I have signed an agreement to purchase the car. So tell me, how is this different from Ijara?

yeh, its on thier name. So its similar to ijara.

[ElDiablo]

Extortion is indeed outlawed and is the primary reason why usury ( with interest being a form of usury, genius) was rendered completely off limits.

However it was not the only reason.

Hmm...


With each payment instalment, the Bank’s share in the property diminishes while your share correspondingly increases.
While the purchase instalments are being made, the Bank will charge you a rent for the use of its share of the property, the rent being calculated according to the respective shares owned.

Many (including most of you) see this as little different to a conventional mortgage,because under both methods monthly payments are made which may be similar in amount.

However, unlike a conventional mortgage, where money is lent to help with the purchase of a property, the Bank makes its profit through the property’s physical use via your occupation as a tenant. This is one of the fundamentals of Islamic finance whereby you can charge for the use of something physical, like a property, but you cannot charge
for the use of money, because this is interest.

The relationship between you and the Bank is also quite different. Two of the major differences are:

• As owner of the property, the Bank faces risks associated with property ownership. This is a situation that does not exist under an interest mortgage, where the bank never actually owns the property, even though they hold the title deeds - that is just their insurance.
• In a conventional mortgage, the customer is the borrower. However, in an Ijara/Musharaka structure, the customer is the Bank’s tenant. This different relationship between the Bank and its customer presents the Bank with different risks and requires different remedies to problems that might occur.

You may think these are minor differences, but trust me they certainly are not when you look on the scale of Third World Debt, for example.

Regardless, it makes perfect sense to millions of people - Muslim and non, hmm and somehow I doubt what a bunch of random desis on RD have to say really matters.

[paulie walnuts]

to sum up the thread, i think we can conclude the following:

a) the dumber muslims think they can fool Allah

b) the smarter muslims differentiate between loansharking and accumulation of interest

[reaz]

Extortion is indeed outlawed and is the primary reason why usury ( with interest being a form of usury, genius) was rendered completely off limits.

However it was not the only reason.

Hmm...


With each payment instalment, the Bank’s share in the property diminishes while your share correspondingly increases.
While the purchase instalments are being made, the Bank will charge you a rent for the use of its share of the property, the rent being calculated according to the respective shares owned.

Many (including most of you) see this as little different to a conventional mortgage,because under both methods monthly payments are made which may be similar in amount.

However, unlike a conventional mortgage, where money is lent to help with the purchase of a property, the Bank makes its profit through the property’s physical use via your occupation as a tenant. This is one of the fundamentals of Islamic finance whereby you can charge for the use of something physical, like a property, but you cannot charge
for the use of money, because this is interest.

The relationship between you and the Bank is also quite different. Two of the major differences are:

• As owner of the property, the Bank faces risks associated with property ownership. This is a situation that does not exist under an interest mortgage, where the bank never actually owns the property, even though they hold the title deeds - that is just their insurance.
• In a conventional mortgage, the customer is the borrower. However, in an Ijara/Musharaka structure, the customer is the Bank’s tenant. This different relationship between the Bank and its customer presents the Bank with different risks and requires different remedies to problems that might occur.

You may think these are minor differences, but trust me they certainly are not when you look on the scale of Third World Debt, for example.

Regardless, it makes perfect sense to millions of people - Muslim and non, hmm and somehow I doubt what a bunch of random desis on RD have to say really matters.


Thanks for explaining. I've been looking for a proper explanation I can reply to. So far it was all about this guy said this, and that guy said that. Hence it's halal and the rest is haram.

What is a Mortgage?
According to Webster's, a mortgage is "the pledging of property to a creditor as security for the payment of a debt." In plain terms, it is the legal contract that says if you don't pay the loan back (along with all of the fees and interest that are included with it), then the lender can have your house.

In states following the "title theory," the lender holds the title to your house until the debt is completely paid off, and the lender will sell your house in order to get the money back if you can't make your mortgage payments. In states following the "lien theory," the mortagee holds a lien on your property and can foreclose said lien and sell your property in the event you default under the mortgatge.

In the states whoever holds the lien or the title owns the house. There is no name on the lien or title. The way it works is that the lien or title gives the bearer the rights to the property be it a car or a home. There is a Promise to Purchase agreement that the lender makes the borrower sign. As far as I am informed the halal loan giving banks make you do the same. So this is why I dont see any difference in the process.

I understand the difference you were claiming is that the bank does not take any responsibility. The banks here are taking responsibility. Also as the term of the loan progresses the borrower pays less in interest and more in principal. That's analogical to the shares he owns in the house. But that's a different argument altogether.