Murabaha finance calculator
In murabaha the financier buys the item and sells it to you at cost plus a known profit paid in installments. This shows the profit, installment and equivalent APR.
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How to use it
- Enter item price (cost), down payment, flat annual profit rate and term.
- The result appears straight away and updates as you edit.
- Copy the result, or copy a link that keeps the same values to share it.
How it is calculated
Financed = price − down payment. Profit = financed × annual profit rate × (months ÷ 12). Installment = (financed + profit) ÷ months. APR is the rate at which the installments are worth the financed amount today.
Example
Inputs: Item price (cost) = 100,000, Down payment = 20,000, Flat annual profit rate = 4 % a year, Term = 60 months. Result: Monthly installment: 1,600.00; Total profit: 16,000.00; Total of installments: 96,000.00.
Limits and caveats
- Assumes a flat profit on the full financed amount for the whole term, the common retail murabaha method.
- Excludes admin fees, insurance or VAT where they apply.
Questions about this tool
Why is the APR higher than the profit rate?
The flat profit is charged on the full amount even though you repay part of it each month, so the cost on the falling balance is higher.
Can murabaha profit change after signing?
No. Murabaha profit is fixed at the contract, which is what this assumes.
Installments total vs sale price?
The installments total is what you pay after the down payment; the sale price also includes the down payment.