Meezan Bank is Pakistan’s largest Islamic bank, and its Car Ijarah is the product most people mean when they search for a “Meezan car loan”. It is not a loan. Meezan buys the car and rents it to you, and when you have paid every rental, the car becomes yours. This guide explains how the arrangement works in practice, what the monthly rental comes to for popular cars, and how to apply.
How Meezan Car Ijarah works
You choose a car from an authorised dealer and apply to Meezan. Once approved, you pay a security deposit and Meezan pays the dealer for the car, which is usually registered in the bank’s name for the duration of the Ijarah. You then pay a monthly rental for using the car. Because Meezan owns it, the risks of ownership, such as the car being destroyed or stolen, are the bank’s, and the car is covered by takaful. At the end of the term, after the last rental, Meezan transfers ownership to you, and the security deposit is adjusted against the price at which the car passes to you.
The rental is benchmarked to 1-Year KIBOR. Meezan’s quoted rate is KIBOR + 4–5%, which works out to about 14.89% a year at current KIBOR. Rentals under a variable arrangement are reviewed once a year. Our guide to Islamic car financing versus conventional loans covers the Shariah structure in more detail.
Monthly rental for popular cars
The table uses the makers’ listed prices, the minimum security deposit allowed under SBP rules and the longest tenure allowed for each car: five years up to 1000cc and three years above. On cars costing more than about PKR 4.3 million the deposit is higher than 30%, because no one can be financed more than PKR 3,000,000 across all banks.
| Car | Security deposit | Monthly rental |
|---|---|---|
| Suzuki Alto VXR | 898,458 | 49,752 (5 yrs) |
| Suzuki Cultus VXR | 1,226,847 | 67,937 (5 yrs) |
| Suzuki Swift GL | 1,460,160 | 103,834 (3 yrs) |
| Toyota Yaris 1.3 GLi MT | 1,649,000 | 103,834 (3 yrs) |
| Honda City 1.2LS | 1,737,000 | 103,834 (3 yrs) |
| Toyota Corolla 1.6 MT | 3,099,000 | 103,834 (3 yrs) |
These figures cover the rental only. Takaful, the tracker and the processing fee are additional. For your exact car, deposit and tenure, use the Meezan Bank car calculator, which also shows the full rental schedule.
Security deposit, takaful and other costs
The security deposit is your upfront contribution, at least 30% of the price. A larger deposit lowers the rental. Takaful is arranged through Meezan’s approved takaful operators, typically charged yearly as a percentage of the car’s value; our guide to insurance and takaful on a financed car explains how it works. You also pay a one-time processing fee, a tracker installation and subscription, and the usual registration costs and withholding tax at purchase. To see the full monthly outlay including takaful and tracker, use the car lease calculator.
Late payment and early termination
If a rental is late, you pay an amount that Meezan passes to charity rather than keeping as income, in line with Shariah rules. If you want to end the Ijarah early, you can buy the car from the bank by paying the outstanding amount; the bank sets out its terms for early termination in the Ijarah agreement, so read that section before you sign.
Eligibility and documents
Meezan’s requirements are similar to other banks’: a minimum age and income, a stable job or business, a clean credit report, and loan payments within the State Bank’s debt burden limit. Salaried applicants provide their CNIC, salary slips, an employment letter and bank statements; self-employed applicants provide business proof, bank statements and tax returns. Our documents and eligibility guide lists everything and explains the most common reasons applications are declined.
How to apply
You can start at any Meezan branch or through the bank’s website. Get a proforma invoice for the car from the dealer, submit the application with your documents, and wait for verification and approval, which usually takes one to two weeks. After approval you pay the security deposit and processing fee, the bank pays the dealer, and you take delivery once the car is registered and the tracker installed. Keep a copy of the Ijarah agreement and the rental schedule, and diarise the annual review date if your rental is variable.
Is Meezan Car Ijarah the cheapest option?
Not always. Its rental rate is competitive among Islamic banks but is not consistently the lowest, and conventional banks with fixed rates can be cheaper in some periods. If an Islamic product is important to you, compare Meezan with the other Islamic banks on rental rate and fees; if not, compare across all banks. Either way, compare the total amount payable rather than the monthly figure alone.
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