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Hire
Purchase (HP) is the traditional way to finance a equipment
purchase. In Islamic banking system, Hire Purchase is based on
the concept of Al-Ijarah Thumma Al-Bai, which incorporates the
Shariah principles of Ijarah (lease) and Bai (sale).
In essence,
the Islamic financial institutions will buy the item that you
desire from the dealer or third party and then lease it back
to you for an agreed period and rental rate. At the end of the
lease period, the Islamic financial institutions will sell it
back to you at an agreed price.
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