How Islamic car finance works, who offers it in the UK, and what to check before you sign. Checked against each provider’s own site.
A small market, so we list each firm’s role, contract and regulator details as it states them. Check the FCA Register before you apply. Checked 9 November 2026.
For individuals of any faith, businesses and private hire drivers, subject to status. Any car from an approved dealer.
Visit Ayan Capital →Works with several finance providers and may be paid a commission by them.
Visit Halal Cars →Look the firm up on the FCA Register. Shariah approval is not the same as FCA authorisation, and you want both.
Ask for the name of the Shariah adviser or board that reviewed the contract you’re signing, not just the firm.
Compare the total payable and the APR-equivalent across deals, not the monthly price.
Ask what happens if you pay late. Many Islamic providers give late fees to charity rather than keep them.
Check who insures and maintains the car while the provider still owns it.
Ask how settling early works and what it costs, and what happens if you want to hand the car back.
Most car finance in the UK is a loan with interest wrapped around a car. Islamic car finance swaps the loan for a sale or a lease. The provider buys the car, and you pay for it in a way that earns them profit or rent instead of interest.
Ijara wa iqtina, a lease that ends in ownership. The provider buys the car and rents it to you. Once you’ve made every payment, ownership passes to you. Ayan, for example, says UK law treats its version as a form of hire purchase, which brings the usual hire purchase protections with it.
Murabaha, a cost-plus sale. The provider buys the car and sells it to you at a higher price agreed upfront, which you pay in instalments. You own the car from the start, and the price can’t go up once it’s agreed.
| Ijara wa iqtina | Murabaha | |
|---|---|---|
| Who owns the car during the deal | The provider | You |
| What you pay | Rent, then ownership at the end | An agreed price, in instalments |
| Can the total go up | Not on a fixed deal | No, it’s fixed when you sign |
Islamic providers don’t charge interest, but UK rules ask lenders to show the cost in a standard way so you can compare. So you’ll see an “APR-equivalent”: the yearly cost of the profit or rent, worked out the way an APR would be. Use it to compare deals, alongside the total you’ll pay.
Some dealers arrange Islamic finance through a specialist provider, acting as a credit broker. That’s fine, but ask which company provides the finance, which contract it uses and who approved it. A broker may be paid a commission, and it should tell you.
The most common way cars are sold on finance. It usually charges interest and ends with a large optional final payment, so it isn’t an Islamic product.
A dealer’s 0% offer charges no interest on paper, but read the late payment terms, and ask a scholar you trust whether the structure satisfies you.
All of them charge interest or fees when payments slip, which is exactly what halal car finance is meant to avoid. If you’d need one to cover the deposit or the payments, the car is probably too expensive for now.
Often the plainest route. A cheaper car bought with savings can beat a better one on finance.
Education, not advice. Rates, rules and terms change, so check with the provider or gov.uk before you decide.
General information, not debt advice. If debts feel unmanageable, free services such as StepChange, National Debtline and Citizens Advice can help.