Murabaha Financing Calculator (Cost-Plus Instalments)
Enter the asset cost, down payment, profit rate and term to see the murabaha sale price and instalments.
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Murabaha Financing Calculator (Cost-Plus Instalments) by TheCalcTools
How the Murabaha Financing Calculator (Cost-Plus Instalments) works
In murabaha the bank buys the asset and sells it to you at cost plus an agreed profit, paid in instalments. The sale price is fixed at the start and does not change if rates move.
Banks usually quote the profit as a flat yearly percentage of the financed amount. Because the balance falls as you pay, a flat rate costs more than the same reducing-balance rate on a conventional loan.
The formula
Worked example
Using the default values shown in the calculator:
| Asset cost | $5e+06 |
|---|---|
| Down payment | $1e+06 |
| Annual profit rate (flat, on the financed amount) | 12 % |
| Term | 5 years |
- Financed amount: 5,000,000 − 1,000,000 = 4,000,000. Profit: 4,000,000 × 12% × 5 = $2,400,000.
- Sale price $6,400,000, paid as $106,667 a month for 60 months.
Result:
| Monthly instalment | $106,667 |
|---|---|
| Total profit (markup) | $2,400,000 |
| Deferred sale price | $6,400,000 |
| Total cost including down payment | $7,400,000 |
Frequently asked questions
Is murabaha the same as interest?
Scholars who approve it distinguish it from interest because it is a sale with a fixed, disclosed profit and the bank owns the asset first. Late payments cannot increase the sale price; many banks require a charity donation instead.
Sources and further reading
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This calculator gives estimates for information only. Check important results independently before you rely on them. See our disclaimer.