Can you really get interest-free loans in Islamic countries?
Islam teaches against usury. It says that paying interest on financial loans is wrong. When you open a bank account in Islamic countries, is there really any place where you get no interest on a deposit or pay no interest on a loan? For instance, in Saudi, if you borrow money from your bank, how does the system work?
Tags: countries, interestfree, Islamic, Loans, really
All the banks in Islamic countries do not follow Islamic Banking.
Some do follow. It works as below:
Example 1: Supose You are a manufecturer (furniture). You need money for raw material.
a) What you have to do is to send them quotations of the raw material. Suppose You needed wood that cost $1000.
b) The bank will purchase it and sale it to you in $1200.
c) You will have to pay $100 to the bank for one year.
Example 2: Supose You are a Business Owner (Any). You need money.
a) You apply for $10000 loan to the bank.
b) The bank will assess the ctual value of your business. Suppose they assess that your business is of $10000 value.
c) The bank will give you $10000 and will become 50/50 partner in your business.
d) On the first month, You will have to return to the bank $1000 in the loan and 50% in the profit. e.g: You earn $100 that month. You will have to deposit $1050.
e) This way you became the owner of 55% and the bank of 45%.
f) Next month you will have to return $1000 from the loan and 45% from the profit.
g) This way you will be able to repay your loan easily and the bank will also not be reluctant to extend you loan.
All the banks in Islamic countries do not follow Islamic Banking.
Some do follow. It works as below:
Example 1: Supose You are a manufecturer (furniture). You need money for raw material.
a) What you have to do is to send them quotations of the raw material. Suppose You needed wood that cost $1000.
b) The bank will purchase it and sale it to you in $1200.
c) You will have to pay $100 to the bank for one year.
Example 2: Supose You are a Business Owner (Any). You need money.
a) You apply for $10000 loan to the bank.
b) The bank will assess the ctual value of your business. Suppose they assess that your business is of $10000 value.
c) The bank will give you $10000 and will become 50/50 partner in your business.
d) On the first month, You will have to return to the bank $1000 in the loan and 50% in the profit. e.g: You earn $100 that month. You will have to deposit $1050.
e) This way you became the owner of 55% and the bank of 45%.
f) Next month you will have to return $1000 from the loan and 45% from the profit.
g) This way you will be able to repay your loan easily and the bank will also not be reluctant to extend you loan