Are you a non-muslim and want to take out a personal loan with reasonable rates in an Islamic bank? Are you wondering if it makes any difference which bank you choose? Well, you are not alone. Many people have asked these questions, and this article will address them.
Can a Non-Muslim Take A Loan From An Islamic Bank?
Islamic banks welcome Muslims and non-Muslims alike, so this should not be an issue when applying for a loan. Instead, the most important thing to compare will be the rates and the conditions of financing, customer service, and the bank’s ethics. Research carried out for Abu Dhabi Islamic Bank (Adib) showed that most customers value simple, straightforward, and transparent banking – for example, they want the full terms and conditions spelt out, so there are no misunderstandings. The concept of “profit rate” is used by Islamic banks instead of “interest rate” because they do not carry out financing in the form of loans. Still, the purchase and sale of tangible assets, such as cars, houses, commodities, or stocks, depends on what type of financing you seek.
In Islam, Murabaha is a commonly used form of financing. This arrangement involves the bank purchasing an asset on behalf of the customer and reselling it to the customer at a premium price to pay back in instalments over a fixed period. There are certain advantages to a conventional loan for the customer. At the beginning of the financing term, customers have a fixed payment amount for the entire time, so it does not increase even if they extend. Late payment penalties do not apply, and profits do not compound. As a result of how the financing is structured, the customer has agreed to pay throughout the entire period. The banking system in Islamic countries generally works closely with its customers and is considerate if their circumstances change. For example, Adib provides job loss protection to everyone who takes out a Murabaha financing product. In addition, should they lose their job, companies will grant a six-month break on all repayment instalments on their personal and vehicle financing.
What Is It About Islamic Banking That Would Make It Attractive To Potential Customers?
Transparency
Islamic banks base their returns on investment earnings rather than interest payments instead of conventional banks’ complex financial engineering techniques. Their basis is moral principles, and some people might find that important. Moreover, the transparency of their dealings should make everything clear and easy to understand, with few chances for surprises or hidden fees.
Keeping It Clean
The act of not doing business with industries that oppose Islam is also a way to remove support from morally questionable enterprises such as gambling, prostitution, and pornography. Please do not worry; you can still use the funds in your Islamic bank account in any way. Nevertheless, you can be sure that you will not indirectly contribute to anything that morally offends you.
