Vehicle financing with diminishing musharakah: A model proposal compatible with Islamic finance principles

This study aims to present a financing model for vehicle financing in accordance with Islamic finance principles. The use of debt-based approaches in current methods providing financing under Islamic finance principles has led to the development of alternative partnership-based models that are compatible with Islamic finance principles in the field of vehicle financing. In this context, the diminishing musharakah method has been examined and a model proposal for vehicle financing in Türkiye has been presented. The research was conducted using a qualitative document analysis method, through which comprehensive information on vehicle financing with diminishing musharakah was obtained. The study addresses the definition, characteristics, historical development, application examples, and jurisprudential views of diminishing musharakah. Additionally, the applicability and potential contributions of diminishing musharakah were evaluated by comparing it with the current vehicle financing models in Türkiye. As a result of the research, it was concluded that the diminishing musharakah method is a fully compatible, partnership-based, and feasible financing model in line with Islamic finance principles.