Shariah-compliant dealer finance

Three agreements make one facility. They are not alternatives, and the parties differ in each, which matters, because it determines who owns the goods at each step.

1. 1. Master Murabaha Dealer Finance Program Agreement

   Financier and anchor.

   Establishes the program as a hybrid Wakala-Murabaha arrangement and gives the financier the right to buy goods from the anchor. No goods move under it, and you are not a party to it.

2. 2. Wakala Agreement

   Financier as principal, distributor as its agent.

   Appoints the distributor as the financier’s agent for the limited purpose of receiving delivery and taking custody of goods the financier has bought. You sign for the goods on the financier’s behalf, and you hold them as custodian: you cannot sell, pledge or move them until the sale to you completes.

3. 3. Murabaha Agreement

   Financier as seller, distributor as buyer.

   The financier sells the goods on at cost plus a fixed, disclosed profit margin, payable on deferred terms. The profit is fixed when the sale is struck: it does not grow with time and it does not increase if you pay late. A fresh Murabaha is signed for every consignment.

What it costs

A profit margin on the sale, fixed as an amount and disclosed before you commit. Cost price plus profit is the contract price, and that is the most you will ever owe.

If you pay late

It is a binding obligation: if you pay late, recovery follows documented Sharia principles. The profit does not increase. Instead the financier may recover its actual documented costs of the delay, and you undertake to pay a separate charity sum, calculated on the overdue amount, into a segregated charity account. That sum is not the financier’s income. Your program sets the rate.

If you pay early

There is no penalty and no fee. The financier may give a rebate, but it is voluntary and you have no right to one, because a guaranteed rebate for early payment would put time back into the price.

Security

Security is taken, and it must be executed and registered before the goods are delivered. You also insure the goods from the moment you take possession until you have paid in full.

Under Distributor finance, you carry the obligation. It is a credit facility to you, with recourse to you, and you repay it. Under Shariah-compliant dealer finance, you owe the agreed price of the goods you bought. You pay the agreed price on the agreed dates. It is a binding obligation: if you pay late, recovery follows documented Sharia principles.

Each statement is taken from the platform’s documented agreements and names the clause it rests on. Your own program’s documents govern, and none of this is legal advice.

• A Shariah-compliant arrangement charges no interest. You buy the goods from the financier at its disclosed cost plus a disclosed profit, payable later, and that price does not grow if you pay late. On the buy side you are always liable to repay. Both structures are financing you must honor whether or not you have sold the goods. Late payment still has consequences: the financier may recover its documented costs of the delay, and a separate charity sum is payable on the overdue amount. Neither is interest and neither is the financier’s income.

  Distributor Master Participation Agreement, clause 3.4

• Title and risk pass to you when you take physical possession of the goods in your own right. Until then you hold them as the financier’s agent.

  Distributor Master Participation Agreement, clause 3.2

• If you default, your anchor suspends further credit supply until you are current again.

  Distributor Master Participation Agreement, clause 4.1(b)

• Every financing screen shows the full cost before you confirm: the amount financed, the total repayable, the due date and the effective annualized cost.

  Distributor Master Participation Agreement, clause 1.2