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INTRODUCTION
Vehicle financing
Vehicle financing is the quickest and most straightforward approach to purchase another
new car. It is also permits to purchase new car by paying just a little initial installment in advance
and the rest in regularly scheduled payments. Hence, rather than a one-time gigantic cost which
is difficult to accomplish, the vehicle installments turns into an essential piece of month to month
costs.
There are two options of vehicle financing these are direct lending or dealership
financing. In direct lending, client will get a loan directly from a bank, finance company or credit
union. For instance, client will agree to pay with the specific amount plus a finance charge.
When the client decided to go with the contract with a dealership to buy a vehicle, client will use
the loan from direct lender to pay for the vehicle. Normally, direct lending may recommended
the client either to comparisons or credit term in advance. Comparison stated that client have the
chance to shop around and ask several lenders directly about their credits term before client
agree to purchase a precise vehicle. While credit term in advance refer that by getting financing
before purchase the vehicle, client will know their rate and other terms when client shopping.
In dealership financing, client and a dealer will come up with a contract where client
purchase a vehicle and agree to pay with specific amount plus a finance charge over period of
time. The dealer may keep the contract but usually they will sell it to a bank, finance company or
credit union. Normally, dealership financing will recommend their client either to convenience,
multiple financing options or special programs. Convenience, here means dealers offer vehicles
and financing in one place and may have extended hours like evenings and weekends. While,
multiple financing options known as the dealers connection with others banks and finance
companies, which can offer the client the range of financing choices. Whereas special program is
dealers sometimes offer manufacturer-sponsored, low-rate or incentive programs to client. The
programs may be limited to particular vehicles or may have special prerequisite, like a larger
down payment or shorter contract length (36 or 48 months).

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Ijarah
The word Ijarah alludes to a lease or commission get that includes a trade of usufruct or
advantages of a benefit or an administration for lease or commission for a concurred period.
Thumma means to be followed by or thereafter, whereas the phrase al bai refers to sales.
Subsequently, this mode of Islamic financing refers to a financial arrangement where the leasing
of an asset is followed by its purchase. The ijarah idea is typically relevant financing contracts,
for example, in genuine property financing, vehicle financing, extend financing and individual
financing. There are many type of ijara contracts, for instance ijara thumma al bai is financial
lease contract.
Basically, this kind of Islamic financing refers to a financial arrangement where the
leasing of an asset is followed by purchase. Therefore, a lease-sale contract and has striking
identical with the conventional financial lease contract. Those who do not have enough funds to
purchase the asset or property will approach a bank or any others Islamic financial institution and
this show to establishment of an ijara thumma al bai contract. The bank or the financial
institutions obtain their fund of asset or property as the two parties, which are the lessor and the
lessee. When come up with a leasing contract whereby the lessee need to pay for the use of the
asset some predetermined amount of rent at fixed interval time. While the lessor, need to retain
the right of tenure of the asset and as per the regulation of ijara thumma al bai, is legally bound
to abide the risks and responsibilities that related with the ownership.

A notable characteristic of an ijara thumma al bai contract is that the entire cost of the asset or
the property specified in the contract is amortized during the lease tenure. For this reason, this
contract is also referred to as a full payment lease contract.