Murabaha Calculator Online

For Standard Murabaha (flat rate): Finance = Asset Cost minus Down Payment. Total Profit = Finance multiplied by Profit Rate multiplied by Years. Monthly Payment = (Finance + Total Profit) divided by (Years multiplied by 12). Example: RM 320,000 at 4% for 30 years. Total Profit = 320,000 × 0.04 × 30 = RM 384,000. Monthly = (320,000 + 384,000) ÷ 360 = RM 1,956. For Declining Balance Murabaha, use the standard amortisation formula: Monthly = P × r × (1+r)^n ÷ ((1+r)^n − 1) where r is monthly rate (4% ÷ 12 = 0.333%) and n is months (30 × 12 = 360). This produces a lower monthly payment and lower total profit than flat rate.

Murabaha is halal because the bank actually purchases the asset first (taking real ownership and risk), then sells it to you at a disclosed markup. This is a legitimate trade transaction (bay) permitted in Islamic law. Riba (interest) is prohibited because it is charging money for the use of money — lending without genuine asset transfer or risk. The key Sharia requirements for valid Murabaha are: the bank must genuinely purchase the asset before selling it to you, the profit margin must be disclosed and agreed upfront, and the bank must bear ownership risk between purchase and resale. When these conditions are met, Islamic scholars universally accept Murabaha as Sharia-compliant. The numerical similarity between profit rates and interest rates is coincidental — the legal structure is fundamentally different.

Murabaha profit cannot be negative — the bank's profit margin is fixed and predetermined at contract start. What Murabaha cannot do by Sharia law is compound additional charges on late payments (as that would be riba on riba). However, Islamic banks may impose late payment fees that go to charity (not the bank's profit), and they can take legal action for default and sell the asset. In Malaysia, BNM guidelines govern default procedures. In UAE, CBUAE regulations apply. Early settlement is handled through Ibra (profit rebate) in most markets — the bank typically rebates the unearned portion of profit if you settle before term end.

The Standard Murabaha tab uses exact flat-rate profit formula: Finance × Rate × Years produces total profit, divided by months for monthly instalment. This matches most Middle East and Pakistani Murabaha products precisely. The Declining Balance tab uses standard amortisation formula which matches Malaysian BBA, UK HPP and UAE declining Murabaha with very high accuracy — within 0.5% of actual bank calculations. Differences arise from lender-specific compound periods (daily vs monthly calculation), processing fees, and stamp duty not included. Use these results for comparison and planning, then get binding figures from your bank. The Compare tab shows mathematically accurate side-by-side costs for all three structures at identical inputs.

BBA (Bay Bithaman Ajil) is a deferred payment Murabaha variant widely used in Malaysia. In standard Murabaha, the sale price is paid in instalments over time. BBA involves the bank selling the asset to you at a deferred price with all instalments due at future dates — legally it is a credit sale at disclosed profit. Both are Sharia-compliant. The key difference is structural: standard Murabaha is typically shorter-term while BBA in Malaysia is used for long-term home and car financing up to 35 years. Malaysian banks have largely shifted from BBA to Musharaka Mutanaqisah (Diminishing Musharaka) for home financing since BNM's 2012 guidelines, though BBA products still exist. This calculator's Standard Murabaha tab applies to both BBA and standard Murabaha calculations equally.

For UAE car Murabaha: select AED currency and Car Finance preset. Typical UAE car Murabaha for a AED 150,000 car with 20% deposit (AED 30,000): Finance = AED 120,000. At 4.5% flat for 5 years: Total Profit = 120,000 × 0.045 × 5 = AED 27,000. Monthly = (120,000 + 27,000) ÷ 60 = AED 2,450. Most UAE banks including Dubai Islamic Bank, Abu Dhabi Islamic Bank and Mashreq Islamic offer car Murabaha at 3.5-5% profit rates for 1-5 year terms. No down payment products are available but typically carry higher profit rates. Compare this with the Declining Balance tab to see the lower-cost alternative.

The Murabaha formula is the same regardless of asset type — the bank purchases an identified asset and sells it to you at cost plus profit. However, market rates differ significantly: personal Murabaha (for goods, equipment, education expenses) typically commands 6-12% profit rates and shorter 2-5 year terms. Home Murabaha runs at lower 3.5-5% rates over 20-35 years. Car Murabaha is typically 3.5-5% for 5-7 years. Business asset Murabaha rates depend on collateral and credit profile. This calculator uses identical mathematics for all — simply input the appropriate cost, deposit, rate and term for your specific asset type and the monthly payment, total profit and payment schedule will calculate correctly.

Yes, 100% free — no registration required, no subscription, no fees forever. Your financial data is never transmitted or stored on any server. All calculations run entirely in your browser using JavaScript — the moment you close the tab, all entered values are gone. CurrentAffair.Today does not collect, sell or share any financial information entered into this calculator. This tool is provided as a free Islamic finance education resource for users in Malaysia, UAE, Saudi Arabia, UK, Pakistan and globally. No advertisement targeting based on your calculator inputs occurs.