Murabaha & Loan Calculator

Islamic Murabaha Financing

Murabaha is an Islamic financing method where the bank purchases the asset (property, car, etc.) and sells it to the customer at a higher price that includes a known, agreed-upon profit margin.

Difference from Conventional Loans

In Murabaha, monthly payments are fixed throughout the financing period and don't change with interest rate fluctuations. The total cost is known upfront.

How is the payment calculated?

Monthly payment = (Financed amount + Total profit) ÷ Number of months

Calculation Methodology

Financed amount

The tool calculates financed amount = asset price − down payment, then uses that amount to estimate profit or interest cost depending on the selected comparison mode.

Monthly payment

In the simplified Murabaha model: total cost = financed amount + total profit, and monthly payment = total cost ÷ number of financing months.

Calculation limits

The calculation is an estimate and excludes administration fees, insurance, early settlement rules, and lender-specific profit calculation methods.

Practical Examples

Car Murabaha — 120,000 SAR over 5 Years

Ahmed wants to buy a car priced at 120,000 SAR with a 20,000 SAR down payment. Financed amount = 120,000 − 20,000 = 100,000 SAR. Total profit = 100,000 × 5.5% × 5 years = 27,500 SAR. Total cost = 100,000 + 27,500 = 127,500 SAR. Monthly payment = 127,500 ÷ 60 months = 2,125 SAR.

Home Murabaha — 1,200,000 SAR over 25 Years

Sara wants to buy a home priced at 1,200,000 SAR with a 300,000 SAR down payment. Financed amount = 1,200,000 − 300,000 = 900,000 SAR. Total profit = 900,000 × 4.5% × 25 years = 1,012,500 SAR. Total cost = 900,000 + 1,012,500 = 1,912,500 SAR. Monthly payment = 1,912,500 ÷ 300 months = 6,375 SAR.

Frequently Asked Questions

What is the difference between Murabaha and conventional loans?

In Murabaha, the bank buys the asset and resells it to the customer at a known, fixed profit margin — it is a sale contract, not a loan. Conventional loans charge interest that may fluctuate. Murabaha installments are fixed and the total cost is known upfront.

Is Murabaha halal? What do scholars say?

Yes, Murabaha is permissible by consensus of major Islamic jurisprudence councils, provided the bank genuinely owns the asset before selling it and the price and profit are disclosed. All Saudi banks have Sharia boards that review Murabaha products for compliance.

Can you pay off Murabaha early? Are there penalties?

Yes, early repayment is a customer right under SAMA regulations. The customer receives a rebate on remaining unearned profits. No penalty is charged — the settlement amount is calculated using SAMA's unified early repayment guide.

What is the typical Murabaha rate in Saudi banks (2024-2026)?

Profit rates generally range from 4% to 7% annually, depending on financing type (personal, home, auto), term length, and creditworthiness. Rates are influenced by SAIBOR, which stood at approximately 5-6% during 2025-2026.

How is the profit rate different from an interest rate?

A Murabaha profit rate is calculated once on the principal and remains fixed for the entire term. A conventional interest rate may be variable and is often calculated on the declining balance, so the effective cost can differ significantly.

Is Murabaha available for cars, homes, and personal finance?

Yes, all Saudi banks offer Murabaha for real estate, auto, and personal financing. In fact, mortgage contracts in Saudi Arabia are exclusively based on Islamic structures such as Murabaha and Ijara, as required by SAMA regulations.

What is SAMA's role in regulating Murabaha?

The Saudi Central Bank (SAMA) licenses all banks and finance companies offering Murabaha products, sets consumer financing regulations, mandates disclosure standards, enforces customer protection rules, and publishes the unified early repayment calculation guide.

How to Use