Understanding Islamic Finance #

Original Question: For Islamic car financing by Maybank, I have an impression that they buy the car first and sell at a higher price. So if the buyer defaults on the payment, will the bank take the car back or will the car dealer?

The financing is based on lease & buyback.

Bank buys the car and leases to the lessee. Final rental is deemed to be purchase.

If buyer defaults, bank takes the car for recovery.

In this sense, very similar to conventional