Loan & Finance · Murabaha · Ijara
Islamic vs Conventional Loan Calculator
Compare what each structure actually costs you in cash over the same tenure — installment, total cost and fees.
Fees on each side (optional)
Step by step
How the comparison works
Set the amount and tenure
Both sides are compared over identical terms.
Pick the Islamic pricing basis
A profit rate for Ijara, or a fixed total markup for Murabaha.
Enter the conventional rate
Priced on reducing-balance interest.
Add each side's fees
So the total reflects what you actually hand over.
Reading the result
A cash comparison, not a ruling
This compares what each structure costs you in money over the same tenure. It does not assess whether a product is Shariah-compliant — that is a matter for the institution's Shariah board and for your own scholar, and it is not something a calculator can determine.
A lower total here does not make a product permissible, and a higher total does not make it impermissible. The two questions are separate and both deserve their own answer.
Where the structures genuinely differ
In a diminishing musharakah the bank and you own the asset jointly and you buy out its share over time while paying rent on the portion you do not yet own. In an ijara you are leasing. A conventional loan lends money against security. The monthly figure can look similar while the legal position on ownership, insurance and default is quite different.
That difference matters most when something goes wrong — early settlement, a missed payment, a total loss of the asset.
Compare the fees, not just the rate
Processing charges, documentation, takaful or insurance, and early-settlement terms vary between institutions and between products, and they are where two apparently similar offers diverge. Ask for the total cost over the tenure in writing from both.
Where this stops
This works from the figures you enter. Where a rate is linked to a benchmark, neither structure is fixed for the full term, and the schedule will change as the benchmark moves.
FAQs
Islamic vs conventional finance FAQs
What does this calculator actually compare?
The cash cost of two facilities over the same tenure — the installment, the total cost above the amount financed, and the total you hand over including each side's fees. It is a price comparison, not a ruling on which facility is Shariah-compliant.
Does a lower cost mean the Islamic facility is better?
Not on its own. Whether a facility is genuinely Shariah-compliant depends on its contract, its ownership and risk structure, and the approval of the institution's Shariah board — none of which arithmetic can settle. Read the contract and take scholarly advice; use this only to understand the money.
What is the difference between the markup and rate modes?
Murabaha is a cost-plus sale: the bank buys the asset and resells it to you at a marked-up price fixed at the outset, and you pay that price in equal installments — so the total cost is set up front and does not vary with time. Ijara (leasing) and diminishing Musharakah are priced off a profit rate, which computes on the same reducing-balance maths as a conventional rate, so the rate mode covers those.
Why can the installments come out almost identical?
Islamic facilities in Pakistan are commonly benchmarked to KIBOR, the same reference conventional lending uses. The contractual structure differs substantially — rent or a sale rather than a loan at interest — even where the resulting cash profile is similar. That similarity in price is exactly why the structure, not the number, is what matters for compliance.
Are the fees comparable between the two?
Not always — each side charges its own processing, documentation, takaful or insurance and, for vehicle facilities, tracker costs. Enter each side's own fees above so the comparison reflects the total you actually pay rather than just the financing cost.
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