Murabaha

Okay kiddo, have you ever gone to a store to buy something and you didn't have enough money to pay for it all at once? The seller might say, "Hey, you can have it now and pay me back later, but you have to pay a little extra for me letting you borrow the money."

Well, that's kind of like what Murabaha is. It's an Islamic financing method where a bank or a lender buys something for you, like a car or a house, and then sells it to you at a higher price. That higher price is like a fee or an interest for them letting you borrow their money to make the purchase.

But wait, there's a catch! In Murabaha, both the lender and the borrower agree on the higher price before the lender makes the purchase. So, the borrower knows what they will have to pay back right from the beginning. This means both parties agree on the profit or fee the lender will get for providing the financing.

The good thing about Murabaha is that it is a way for people to make big purchases when they don't have all the money upfront, without breaking the rules of their religion. It's like agreeing on a fair price to pay for borrowing money, without it being considered as interest which is forbidden in Islam.

So, does that make sense to you, kiddo?