The advantage of this type of loan is the Financing and low interest rates (Commercial) / Murabaha rate (Islamic) compared to personal loans. Car loans must be for personal use and not for commercial or work us such as carrying goods or such.
This loan is designed to achieve the client’s dream of buying a new car (0 mileage) with a LTV ratio (loan to value) up to 100% in some banks. All according to the client’s income as a value and a source.
LTV : Loan To Value ratio means the amount of the loan in comparison of the value of the car/home/land etc.
Ex: Buying a car for 10,000 and getting a loan for 8,000, that’s 80% LTV.
This loan aims to achieve the client’s need of buying a used car according to his income, and this type of loan has two main differences between the banks.
The age of the car at the final maturity date for the loan determined by the banks and according to their credit policy