Ijara Questions With Answers
1. What is Ijara in Islamic finance?
Ijara is an Islamic financial concept that involves leasing or renting assets, typically real estate or equipment, in a Sharia-compliant manner. In an Ijara transaction, one party (the lessor) leases an asset to another party (the lessee) for an agreed-upon rental payment.
The lessee uses the asset while paying rent, and at the end of the lease term, they may have the option to purchase the asset at a pre-agreed price. Ijara adheres to Islamic principles, such as avoiding interest (Riba) and ensuring that the transaction is based on a real and tangible asset.