Monday, January 18, 2010
The Rights To Use And Not Yet Ownership Of Vehicles
Our first impression when buying vehicles through hire-purchase agreements is that such vehicles are ours in terms of ownership. But the reality is not. The simple explanation that until we have paid all the installments under the hire-purchase agreements, the ownership of such vehicles is in the hand of financial institutions. We just merely have the rights to use the vehicles. The status of ownership is similar between conventional and Islamic hire purchase contract. The other similar characteristic is in term of the existence of two separate contracts. The first contract is the contract of hire and the second one is the contract of purchase. Thus, we have an option at the last installment either to purchase or return back the vehicles. The main different is the term charges existed in conventional hire purchase contract which is not allowed under Islamic hire purchase contract.