Comparing against a conventional loan
The payment shape here mirrors a standard amortizing loan, which makes it directly comparable to a conventional mortgage or auto loan on payment and total cost — see the Loan / EMI Calculator to compare side by side.
Frequently asked questions
What is HPSM?
Hire Purchase under Shirkatul Melk — the bank and client jointly own an asset. The client pays rent on the bank's share while gradually buying it out in installments, so the bank's ownership share (and the rent charged on it) shrinks over time, similar in shape to how a conventional loan balance declines.
Why call it "profit rate" instead of interest?
Islamic finance structures returns as rent or profit-sharing on a real asset rather than interest on a cash loan — for estimation purposes the payment math works out the same shape as a conventional declining-balance loan, which is what this calculator uses.
Does early settlement get a discount?
This shows the remaining balance you'd need to buy out the bank's ownership — many banks additionally offer a rebate on unearned profit for early full settlement, at their discretion, which isn't modeled here. Ask your bank for their specific early-settlement rebate policy.
Last updated: June 2026