Ar Rahnu is a form of Islamic pawnbroking that operates in Malaysia. It provides short-term loans to individuals in exchange for gold jewelry as collateral. Here’s a breakdown of how Ar Rahnu works:
Key Principles:
- Shariah-compliant: Ar Rahnu adheres to Islamic financial principles, which prohibit interest (riba) and uncertainty (gharar).
- Collateral-based: The loan is secured against the value of the gold jewelry pledged by the borrower.
- Short-term financing: Loans are typically for short durations, often ranging from a few weeks to 6 months, 12 months, or 18 months.
How it Works:
- Pledging Gold: The borrower brings their gold jewelry to an Ar Rahnu counter. Ar Rahnu that accepts GB Gold collection include Pajak Gadai Islam Sahabat Ar-Rahnu, Bank Muamalat, Agrobank, Arrahnu KDE, Arrahnu KPDRM and Arrahnu Koputra.
- Valuation: The gold is weighed and appraised to determine its value.
- Loan Approval: Based on the gold’s value, a loan amount is offered to the borrower. The loan amount is usually a percentage of the gold’s value, typically around 70%.
- Contract: The borrower signs a contract with the Ar Rahnu operator, outlining the loan terms, repayment schedule, and other conditions.
- Loan Disbursement: The borrower receives the loan amount in cash.
- Repayment: The borrower can repay the loan in full or in installments within the agreed-upon timeframe.
- Redemption: Upon full repayment, the borrower redeems their gold jewelry.
Benefits of Ar Rahnu:
- Shariah-compliant alternative: Provides a halal option for short-term financing.
- Quick and easy access to funds: The process is relatively straightforward and can be completed quickly.
- Flexible repayment options: Borrowers can choose to repay in full or in installments.
- Safekeeping of gold: The gold is securely stored by the Ar Rahnu operator.
In Summary:
Ar Rahnu offers a convenient and Shariah-compliant way for individuals in Malaysia to access short-term financing. It provides a valuable financial service, particularly for those who may not have access to traditional banking options.