Diminishing Musharakah (property Finance)
ICFAL has developed a unique model which takes into account the real market value of rental and growth (instead of converting financial market interest (or Riba) into so called rental/profit). Diminishing Mushrakah is considered to be the most desired modes of Islamic financing. It is used mostly when one party who wants to own an asset cannot afford to pay the full price and takes the assistance of financing from another party which ends up with the complete ownership of the asset by the first party who purchase the share of the other party over a period of time whilst at the same time complying with Islamic guidelines.
When used in property financing
Murabaha (Car Finance)
Murabaha financing may be utilized for the purchase of small products wherein the member pays in pre-agreed instalments. In this structure, an intermediary buys a property with free and clear title. Murabaha is not an interest-bearing loan, which is considered riba (or excess), and is an acceptable form of credit sale under Islamic guidelines.