Car Ijarah was Pakistan's first interest-free car financing, and two decades on it is still the product every competitor gets measured against. Meezan Bank owns the car, rents it to you, and publishes actual rates where most rivals write 'as per Schedule of Charges'. This guide covers what the product page says, what it costs, and where the honest weaknesses are, based on terms verified August 3, 2026.
The oversight behind it is the deepest in the market: a Shariah Supervisory Board chaired by Justice (Retd.) Mufti Muhammad Taqi Usmani, a full-time Shariah compliance department, a separate Shariah audit department, and a downloadable fatwa on the product page itself.
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What Car Ijarah actually is
It is an operating lease, not a disguised loan. Meezan buys the vehicle and keeps ownership for the term, which runs from one to seven years. You pay a monthly rental for the use of the car. Ownership risks stay with the bank; only usage risks pass to you. At the end of the term, the car is sold to you at a token amount or gifted. That risk allocation, more than any rate, is what distinguishes this product.
The rates, with dates attached
At the August 3, 2026 crawl, Meezan published fixed rates from 12.98% for a one-year term rising to 13.29% for seven years, excluding takaful and tracker. A variable option stood at 11.74%. These are real published numbers, which is rarer than it should be in this market.
Now the caveat that matters: Meezan states rates can be revised at disbursement based on deposit and PKRV movements, and the table carries no as-of date on the page. Treat the published figures as a dated snapshot and get your own rate confirmed in writing before you commit.
Security deposits by buyer type
Salaried buyers of standard cars start at 15%, the gentlest entry in the market alongside Bank AL Habib. It climbs from there: 25% for salaried SUV buyers, 25% for businessmen and self-employed applicants (35% for SUVs), and 30% minimum for used-car Ijarah. Approval is quoted at one to seven working days.
The fine print that favors you
Three published terms do real work. First, rentals begin only after vehicle delivery, so you pay nothing while the car sits at the dealership. Second, if the car is stolen or destroyed, Meezan stops charging rent; the bank's page says the concept of rental becomes void on total loss. A conventional lease would keep billing you. Third, late payment undertakings are paid into a bank-administered charity fund, not booked as income, which removes the bank's financial incentive to profit from your delinquency.
A fourth term is easy to miss: Meezan bears the withholding tax on the vehicle purchase. That is an ownership cost sitting with the owner, exactly as an Ijarah requires, and it is worth real money at purchase time.
Limits, tenures and the Residual Value variant
Maximum net financing is PKR 10 million, far above the PKR 3 million ceiling most competitors apply, and you can finance up to two vehicles. Standard tenure is one to seven years. The Residual Value variant, at one to five years, lowers rentals by parking 40% to 60% of the value as a residual, and gives you the option to return the car at maturity instead of buying it. The catch: the residual variant is capped by the SBP aggregate limit of Rs 3,000,000 across all banks, which confines it to modest vehicles.
Fees and takaful
Processing is PKR 3,800 plus 15% to 16% FED (roughly PKR 465), non-refundable, which is among the lowest in the market next to HBL's Rs 13,000 or Faysal's Rs 12,000. Cover is takaful-only, quoted from 1.99% of vehicle value per year through EFU and Adamjee at the August 2026 page. A tracker applies. Overseas Pakistanis using the Roshan Digital Account variant can finance a new locally assembled car with no processing charges.
The honest cons
The rate table being revisable at disbursement is the big one: the certainty you think you are buying is only confirmed when you sign. Deposits climb steeply outside the base case, with SUVs at 25% to 35% and used cars from 30%. And while the 11.74% variable rate looks cheaper than the fixed table, it moves, so the comparison is not apples to apples. None of these are dealbreakers. They are reasons to negotiate with current numbers rather than the website's.
How it compares
Against Askari's fixed-rental Ijarah at 13.79% to 15.37%, Meezan's fixed table is cheaper on paper but softer in commitment, since Askari fixes for the full term while Meezan reserves revision at disbursement. Against KIBOR-linked products like UBL Ameen Drive at 1-year KIBOR plus 4.25% to 5.75%, Meezan's fixed option removes repricing risk entirely once disbursed. For the full field, see our comparison of every halal car financing option, or get matched if you want a shortlist.
Frequently asked questions
Is Meezan Car Ijarah interest-free in substance or just in name?
The risk allocation says substance. Rent stops on total loss, late fees go to charity rather than income, the bank pays the withholding tax it owes as owner, and a product-level fatwa is published under a board chaired by Mufti Taqi Usmani. Those are costs a bank only accepts if the ownership is real.
What deposit do I need for Meezan Car Ijarah?
From 15% if you are salaried and buying a standard new car. Businessmen and self-employed buyers start at 25%, SUVs run 25% to 35%, and used cars need at least 30%.
Can I end the Ijarah early?
Yes, early termination is available. Because the bank owns the car, settlement involves purchasing it rather than simply clearing a balance, so ask for the early-termination workings in writing before signing if prepayment is likely for you.
What is the Residual Value option and who should use it?
It parks 40% to 60% of the car's value as a residual, which cuts your monthly rental, and lets you return the car at maturity instead of buying it. It suits buyers who change cars every few years. Note it is limited to five-year terms and capped at Rs 3,000,000 by the SBP aggregate limit.
Compare providers in your state
See side-by-side comparisons of Shariah-compliant products, or let our matcher recommend the best options for your situation.
Does Car Ijarah cover motorcycles or only cars?
Cars. Meezan's two-wheeler product is Apni Bike, a separate Musawamah-based facility covering gasoline and electric motorcycles. We cover it in our Islamic motorcycle financing guide.