Islamic financing firms and banks offer a diverse range of products and services designed to meet customers' needs using various Islamic business contracts. These contracts can be equity-based or debt-based.

• Equity-Based Financing: This financing approach is based on profit-sharing (Mudarabah) and profit-loss sharing (Musharakah) contracts. Equity-Based Ownership Products:
• Declining Balance Shared Equity (Musharakah Mutanaqisah)
• Lease to Own (Ijarah Muntahia Bittamleek)

• Debt-Based Financing: When financing involves purchasing or leasing an asset for a specific purpose, it creates a debt for the buyer or lessee. This is why it's referred to as debt financing or asset-based financing. Customers entering debt-based financing are obligated to make payments according to agreed terms and schedules. Debt-Based Products:
• Installment Sale (Murabaha)
• Leasing (Ijarah)
• Islamic Forwards (Salam and Istisna)

Islamic Financing Arrangements

Profit sharing (Mudharabah) and Profit-loss sharing (Musharakah) 

• Project finance

Profit sharing (Mudharabah) and profit-loss sharing (Musharakah) are commonly practiced by Islamic funds such as Islamic private equity and venture capital funds. However, in the actual practice of Islamic banks, these contracts are not used as frequently. Islamic banks utilize a profit-sharing (Mudarabah) contract on the liability side when accepting funds in investment accounts. Profit-loss sharing (Musharakah) contracts are used by Islamic banks to participate in the creation of joint-stock companies for ongoing business ventures and to finance specific projects temporarily for profit generation. These are known as diminishing Musharakah or Declining Balance Shared Equity (Musharakah Mutanaqisah). Funds are invested in Sharia-compliant projects after they pass both feasibility and Sharia-compliance screenings of the company and the project.

Declining Balance Shared Equity (Musharakah Mutanaqisah)

• Home finance
• Vehicle (auto) finance

Musharakah Mutanaqisah is one of forms of Musharakah contract where two parties enter into a partnership contract in a joint venture, and then one party sells the other one its shares in the venture. For example in home financing, this arrangement involves the Islamic bank and the client jointly purchasing a home. The bank gradually transfers its equity share to the homeowner through payments, increasing the homeowner's equity. Upon completion of the sale of its equity, the Islamic bank transfers the homeownership title to the buyer with the final payment.

Lease to Own (Ijarah Muntahia Bittamleek)

• Home finance
• Vehicle (auto) finance

An Islamic leasing (Ijarah) contract involves selling the right to use an asset (usufruct) for a specific period, provided that the lessor owns the leased object throughout the lease. The lease-to-own (Ijarah Muntahia Bittamleek, or more commonly known as Ijarah wa Iqtina) financing arrangement is similar to the declining balance shared equity (Musharakah Mutanaqisah) option, where the bank provides most or all of the funding for the house or vehicle and agrees to sell it to the client. This type of leasing contract allows the ownership of the leased property to be transferred to the lessee either at the end of the lease term or at any time during the lease term when the lessee (customer) decides to purchase the leased asset. Each payment is divided between the lease cost and the purchase price. Depending on the client’s situation, the bank may either purchase the property from the customer seeking home financing or acquire it from the market. If the property is ready and usable, an Ijarah Muntahia Bittamleek contract is signed. For under-construction properties, an Ijarah Mowsufa Fi Al Dhimmah contract is executed.

Markup-sale (Murabaha)

• Home finance
• Vehicle (auto) finance
• Equipment finance
• Machinery finance
• Commodity financing 

Under the mark-up sale contract (Murabaha), the Islamic bank acts as an intermediary between its client and the vendor. The client approaches the bank to purchase the required item, and they then agree on a sale price with the buyer, including the bank's markup profit. The purchase can be made either as a lump sum or through installments. In the sale of commodities, one of the commonly used contracts is Musawamah, which involves purchasing at a price with a profit markup. In Musawamah, the markup isn't explicitly stated as a percentage of the cost or as a fixed amount. Instead, the final selling price incorporates the seller's profit, but the specific breakdown (cost + profit) remains undisclosed. This contrasts with Murabaha, where the seller clearly discloses both the purchasing price and the added profit margin.

Islamic Forward Contracts

• Agriculture Finance (Salam)
• Manufacturing and home finance (Istisna)

These are less common financing options used for specific business needs, such as Salam in agriculture and Istisna in construction and production. These contracts are exceptions to the concept of gharar (excessive uncertainty). In a Salam contract, the price for the item is fully prepaid upfront, with the delivery occurring at a future date. Istisna contract allows for installment payments while the good is being produced or constructed. Since most Islamic banks don't directly engage in managing agricultural or construction projects themselves, they utilize Parallel Salam and Parallel Istisna structures to meet their customers' needs for financing under these contracts. Parallel Istisna can be the less common nature provided Islamic mortgages are a core product for some Islamic banks. In Parallel Istisna, the bank enters into two separate Istisna contracts: the first contract is with the client, seeking a home financing. And after specifying the property details and price signs the first Istisna contract. The second contract is with a construction company, outlining the construction specifications agreed upon with the client.

These are just a few of the many Islamic financing products and services available. They offer Sharia-compliant alternatives to conventional financial products.