Leasing (إجارة) is originally a normal business transaction, like sale. It later became useful for financing because an institution could purchase equipment and lease its use to a customer instead of advancing a cash loan.
Therefore, an Islamic financial lease is valid only if it remains a genuine lease. Replacing the word “interest” with “rent” is not enough if real ownership and risk do not exist.
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Leasing (إجارة): What Is Actually Being Transferred?
Leasing (إجارة) is originally a normal business transaction, like sale. It later became useful for financing because an institution could purchase equipment and lease its use to a customer instead of advancing a cash loan.
Therefore, an Islamic financial lease is valid only if it remains a genuine lease. Replacing the word “interest” with “rent” is not enough if real ownership and risk do not exist.