01 Multiple choice — 12 questions
One attempt per option. A correct answer locks the question and explains itself; a wrong one only disables that option, so you can keep trying. The running score sits at the bottom of the page.
02 Written questions — 5 questions
Answer each in full before opening its model answer. The model answers are written at the length a full-mark response needs.
1. Explain why the lease ending with ownership, as commonly practised, is not allowed.
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The core problem is a contradiction between its name and its reality: it is called a lease but intended as a sale. Three problems follow (“Overpay, Unclear, Unfair”):
Overpay: the payments are above market rent because they include the buyer's equity, yet all of it is called rent; if the contract ends early, the client loses what they paid and the asset.
Unclear: the contract cannot be classified as sale or lease, each with its own rules. Structural repairs and ownership risk belong to the owner; making the tenant carry them turns it into an invalid hybrid.
Unfair: if the client defaults mid-term, keeping every earlier payment as “rent” is exploitation — they paid purchase-level amounts without receiving ownership.
2. Give the four conditions under which a sale based on leasing can be permissible, and show which problem each one answers.
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1. Period: the lease period is specified and the lease conditions apply throughout it — this removes the sale-or-lease confusion, since it is a true lease until the end.
2. Price: each installment is fixed, with no increase if payment is delayed.
3. Pass: ownership passes at the end as a gift or by sale at a nominal price, according to the earlier promise between owner and tenant — a separate transfer, not hidden inside the rent.
4. No down payment: nothing is taken at the start, so the tenant does not lose it if they cannot complete the payments — answering the unfair loss on default.
An exam answer should give both the reasons it fails and these conditions, not just “it is haram”.
3. Explain how a lease ending with ownership works, then compare it with an installment sale and with a standard lease.
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The bank leases an asset such as a car or house for a set period, at a rent that often exceeds market rent, and promises to transfer ownership through a separate agreement once every installment is paid. The client is a tenant throughout; the bank owns the asset until the end.
Vs. installment sale: both aim at ownership and are paid in structured payments, but an installment sale is one contract with ownership passing immediately, while the ownership-lease uses two contracts with ownership on the last day.
Vs. standard lease: the ownership-lease aims at eventual ownership with two contracts; a standard lease gives temporary use only, the user stays a tenant for the whole term, and there is one contract.
4. Define leasing (ijarah), give its evidence, and set out the rights and obligations of each party.
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Ijarah is a contract transferring a known benefit or usability of an asset for a specified period in exchange for an agreed payment. The lessor (owner) grants the lessee (tenant) the right to use the asset; the benefit is sold, not the asset.
Evidence: the hadith qudsi in Sahih al-Bukhari in which Allah says He will be against three on the Day of Resurrection — including one who hires a workman, takes full work from him and does not pay his wages. Hiring is therefore a recognised contract, and withholding the payment a grave sin.
Owner: deliver the asset in usable condition, bear ownership risk and structural repairs, reclaim the asset at the end. Tenant: pay the rent on schedule, maintain the asset properly, return it at the end.
5. A client in a common ownership-lease defaults in the last year. Analyse what happens under the common form and under the permissible form.
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Common form: the bank keeps every earlier payment as rent and takes back the asset. The client has paid above-market, purchase-level amounts — including their equity — and leaves with nothing. This is the “Unfair” problem, and it shows the “Overpay” problem too.
Permissible form: there was no down payment to lose, each installment was a fixed, genuine rent for a specified period, and ownership was only ever to pass at the end by gift or nominal sale. So the client has paid rent for the use they actually received, and the outcome is a fair lease rather than a lost purchase.