Ar Rahnu – Islamic Pawnbroking

Lately I have been receiving some enquiries on a method that is being utilized by among the gold traders to create cashflow on the gold funding often called Ar Rahnu. On this publish, I will try to share among the understandings that I’ve in direction of this scheme.

What Ar Rahnu is all about?

An Islamic Pawnbroking system which permits debtors to make use of gold cash or jewelry as collateral. It’s designed to stick to Islamic legal guidelines the place debtors pay a safekeeping payment, versus a compounding rate of interest.

Why would anybody go for Ar Rahnu?

It’s helpful for many who want a small mortgage of a minimum of RM100. It seems to be extra cost-competitive than private loans, which generally cost flat rates of interest of 9% to 12% a 12 months. The Islamic pawnbroking scheme costs a month-to-month safe-keeping payment of $zero.50 – $zero.75 for each RM100 value of gold. This equals to an rate of interest of zero.5% to zero.75% a month, or 6% to 9% a 12 months.

Most significantly, there’s a excessive probability of mortgage being authorized as a result of this scheme is backed by gold.

How Ar Rahnu Works?

Step 1 – Let’s assume that you just provide the financial institution RM100,000 value of gold jewelry as collateral with a margin of financing of 65%. Which means you’ll obtain RM6,500 of money.

Step 2 – Do take be aware that there’s a month-to-month safekeeping payment. Let’s assume that the month-to-month safekeeping payment is zero.75%. Meaning that there’s a safekeeping payment of RM0.75 for each RM100 value of gold worth. This equates your month-to-month safekeeping payment to be RM75.

Step three – Ar Rahnu’s financing tenure is usually mounted at 6 months, though clients are allowed to resume it in multiples of 6 months. Subsequently, by the top of 6 months, you’ll incur a complete safe-keeping payment of RM450. On the finish of the tenure, your gold will probably be returned to you as you pay your principal and the safekeeping payment

Nonetheless, if the worth of gold has elevated in the course of the public sale, the surplus stability (after deducting the principal and safekeeping) will probably be refunded to you.

Do take be aware that if you happen to fail to pay your principal and the safekeeping payment, the financial institution has the suitable to public sale off your gold.

Which Financial institution Provides Ar Rahnu?

To this point, there are 2 native banks that gives the Islamic pawnbroking scheme in Malaysia. Go to Agrobank or Financial institution Rakyat to grasp higher how Ar Rahnu works!

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