Leasing a ৳20 lakh car or machine with 20% advance at a 13.49% rate of rent over 5 years costs about ৳36,808 a month; the total with the advance is about ৳26,08,451. Try your own figures below.
৳
= 20 lakh taka
%
= ৳4,00,000, paid at the start
%
An example rate is filled in — enter your bank's rate.
years
= 60 months / 60 instalments
%
= ৳0. 0 means ownership passes at the end by gift or a token price.
Monthly rent
৳36,808
60 months
Asset value
৳20,00,000
Advance (at the start)
৳4,00,000
Total rent
৳22,08,451
of which bank's profit
৳6,08,451
Transfer price at the end
৳0
Total cost, all in
৳26,08,451
Leasing an asset worth ৳20,00,000 at a 13.49% rate of rent over 5 years costs ৳36,808 a month; with the advance and transfer price the total is ৳26,08,451.
Under Ijarah the bank owns the asset during the lease; you use it for rent and take ownership at the end under a separate agreement. Who pays for major repairs and insurance differs by bank — check the contract.
The example rate of rent comes from one institution's published rates; being verified — enter your bank's rate.
Enter the advance rent or your own share at the start, in percent.
Choose the rate of rent and the lease term.
Enter a transfer price at the end if any (0 if none), then see the rent and schedule.
How the rent is worked out
Bank’s investment = asset value − advance. Monthly rate of rent r = yearly rate ÷ 12 ÷ 100, term n months, transfer price R.
Monthly rent = [investment − R ÷ (1+r)ⁿ] × r ÷ [1 − (1+r)⁻ⁿ]
Part of each rent is the bank’s profit on the value still unrecovered; the rest recovers the cost. At the end only the transfer price remains. With a transfer price of 0 the schedule matches HPSM.
Examples
Value
Advance
Rate
Term
Transfer price
Monthly rent
Total cost
৳20,00,000
20%
13.49%
5 years
0
about ৳36,808
about ৳26,08,451
৳20,00,000
20%
13.49%
5 years
10% (৳2,00,000)
about ৳34,455
about ৳26,67,294
Good to know in Bangladesh
Uses: Islamic banks and financial institutions offer Ijarah for vehicles, industrial machinery and sometimes homes.
Rates differ by bank: 13.49% is an example from one institution’s published rates.
Maintenance and insurance: routine upkeep is usually the user’s, major repairs and insurance the owner’s — but contracts differ.
More: when Ijarah makes sense
Ijarah suits business machinery or vehicles where you’d rather not tie up your own capital. Because the bank owns the asset, the rules for sharing loss differ. Before signing, be clear on the transfer terms, early settlement and who carries insurance.
Frequently asked questions
What is Ijarah?
Ijarah means lease. The bank buys the asset, keeps ownership and lets you use it for a fixed rent. Under Ijarah Muntahia Bittamleek, ownership passes to you at the end under a separate agreement, as a gift or for a set price.
How is Ijarah different from HPSM?
Under HPSM you part-own the asset from the start and buy the bank's share in instalments. Under Ijarah the bank owns the whole asset during the lease, so major loss or insurance usually falls on the bank as owner.
What does a transfer price do?
Agreeing to pay something at the end to take ownership lowers the monthly rent, but that amount is due in one go at the end and the total cost rises slightly. With a 10% transfer price the example above drops to ৳34,455 a month.
Who sets the rate of rent?
The bank, by its own policy; many contracts allow the rate to be reset at intervals. This calculator assumes one rate for the whole term.
Can I pay off before the term ends?
Many banks allow it: you pay the amount still unrecovered (plus any transfer price) and take ownership, so no further rent is due. The schedule above shows what is left at the end of each year; check the contract for fees or conditions.