Tawarruq & Islamic Personal Finance Calculator
Calculate Sharia-compliant personal cash financing via Commodity Murabaha (Tawarruq Munazzam) with monthly installments, flat vs reducing rates, and Debt-to-Burden ratios.
Interactive Tawarruq & Islamic Personal Finance Calculator Workspace
Tawarruq & Commodity Murabaha Standards (AAOIFI Standard 30)
Tawarruq (التورق المبارك) provides cash liquidity through real asset transactions: The bank buys exchange-traded commodities (metals) on cash, sells them to the customer on deferred installments with an agreed profit markup, and sells the commodities to a third party for immediate cash deposited into the customer's account.
Cash Financing & Income Details
Financing Repayment
DSR: 28.6% (Eligible)Mathematical Formula & Variables
Total Payable = Financed Capital (P) + (P × Flat Profit Rate × Years) + Commodity Brokerage Fee; Monthly = Total / MonthsTawarruq (التورق المبارك / Commodity Murabaha) is the most widely utilized structure for Islamic personal financing. The bank purchases commodities (e.g., metals on the London Metal Exchange) for cash on the client's behalf, sells them to the client on deferred installment terms at cost plus profit (Murabaha), and then, acting as the customer's agent (Wakalah), sells the commodities to a third-party broker for immediate spot cash disbursed to the customer.
Variable Definitions
| Symbol | Description |
|---|---|
| Financing Capital (P) | Net cash liquidity amount disbursed to the customer. |
| Financing Tenure (t) | Repayment period in years (e.g., 1 to 7 years) or months (n = t × 12). |
| Flat Profit Rate (r_flat) | Annual fixed Sharia profit markup percentage charged on the original principal. |
| Reducing Rate Equivalent (APR) | The equivalent reducing balance annual percentage rate: APR ≈ (2n × r_flat) / (n + 1). |
| Commodity Brokerage Fees | Nominal platform trading fees incurred for London Metal Exchange / Bursa Suq Al-Sila transactions. |
| Monthly Income & Existing Debts | Inputs to evaluate Debt Service Ratio (DSR / DBR) affordability limits (typically capped at 50%). |
How to Use the Tawarruq & Islamic Personal Finance Calculator
- Enter the desired cash financing amount you need for personal expenses, medical costs, education, or debt consolidation.
- Specify the financing tenure in years or months (standard consumer personal financing ranges from 1 to 5 or 7 years).
- Input the bank's annual flat profit rate or nominal profit margin percentage.
- Optionally enter commodity platform brokerage fees (typically $20 to $100 per transaction).
- Input your gross monthly salary and current monthly debt obligations to compute your Debt Service Ratio (DSR) eligibility.
- Review your calculated monthly installment, total bank profit markup, reducing balance APR equivalent, and DSR affordability check.
3-Year Tawarruq Personal Cash Financing Example
Scenario Context: A customer requires $20,000 cash for home renovation through an Islamic bank using Commodity Murabaha (Tawarruq). The tenure is 3 years (36 months) with an annual flat profit rate of 4.50% and a $50 commodity brokerage fee. The customer earns $5,000 monthly with existing debt payments of $800.
Frequently Asked Questions
Support CalculatorHub
Enjoying this calculator? Support our work to keep all 167+ calculation tools 100% free and open for everyone.
Support on Ko-fi