In an Ijara agreement, who pays rent for the leased assets?

In an Ijara agreement, the lessee pays rent for the leased assets. Ijara is an Islamic finance lease that allows the lessee to use an asset without owning it, while the lessor retains ownership of the asset. The lessee makes periodic rental payments to the lessor in exchange for the right to use that asset.

This arrangement is designed to comply with Sharia law, which prohibits riba (usury or interest), thus differentiating it from conventional loans or leasing agreements. The payments made by the lessee cover the cost of using the asset and can also include maintenance and other related services, depending on the specific terms of the Ijara contract.

The roles of the lessor, lender, and investor differ significantly in this context. While the lessor owns the asset and receives rent, the lender typically refers to someone providing capital for financing, and the investor might be involved in funding projects but is not specifically tied to the rental agreement in this structure.