Islamic vs Conventional Financing: What’s the Difference?
Both let you pay for something over time, but they are built differently. Here is the difference in plain language.
The basic difference
A conventional loan lends you money and charges interest on it. Islamic financing is built on approved contracts, such as murabaha or tawarruq, where the bank sells you an asset or commodity and you pay for it in installments at an agreed profit.
What stays the same
You still repay in monthly installments over an agreed period, and the bank still assesses your income, commitments and credit history before approving.
What to ask your bank
Which contract is used, what the profit rate and total repayment are, what fees apply, and what happens if you settle early. Each Islamic bank has its own Shariah board and its own terms.
Rates, fees and requirements are set by each bank and can change. Not sure how this applies to you? Request a call and we will go through it together.