Under ijara, a financing organization acquires property and transfers it to the client for use in exchange for periodic payments. Ownership remains with the organization, which bears associated risks — particularly the risk of damage or loss of property, unless caused by the user's actions.
The distribution of risks is what distinguishes ijara from ordinary leasing in substance, not just in name. Payment is charged for the use of a real asset rather than for provided funds, so the organization's income is not riba.
A separate type provides for the transfer of property ownership to the client upon expiration of the term — either through a separate purchase agreement or through a gift upon completion of all payments. Such a structure is used when financing housing and transport.
Practical considerations when comparing with leasing: attention should be paid to the composition of payments, the distribution of insurance and maintenance expenses, as well as the procedure in case of early termination of the contract and the conditions for transfer of ownership.