Murabaha vs lease-to-own (and the balloon payment)

In a murabaha, the bank buys the car and resells it to you at cost plus a disclosed profit. The car is registered in your name from day one, with a mortgage mark until you finish paying. This is the most common and most straightforward structure.

In lease-to-own (ijara), the finance company owns the car and you lease it; ownership transfers to you only at the end if you exercise the purchase option. Watch for extra costs: ownership-transfer fees at the end, insurance bundled into installments at the lessor's price, and stricter early-exit terms.

Many offers add a balloon (deferred final) payment — for example 50/50 plans. The monthly installment looks attractive, but you still owe a large lump sum at the end, often around the car's residual value. SAMA requires it to be disclosed in the contract but does not cap its size, so read the schedule carefully and compare total cost, not monthly cost.

Official source