All About the Chase Credit Cards

Chase is one of the world’s top ranked financial service providers that have entered into partnership with JP Morgan partners and their equity partners. There are many branches of this company that are situated across Chicago. The profitability of the company’s financial record sheet currently exceeds the $1.2 trillion mark. As a matter of fact, Chase is providing its incomparable services to the personal and institutional customers in the corporate sector. In United States, Chase provides a huge range of services such as personal lending, investing insurance services, business services and personal services, amongst which, the chase credit cards are one of the most popular ones.

There are a total number of 50 countries where Chase is actively providing services at the moment. Some of these facilities include the service of innovative credit including non-profit, college, retail, student, gas or auto, entertainment, rebate, general purpose and chase rewards credit cards. Beside these, the retail banking, investment, business and personal service including business loans, auto loans, mortgages, savings, home equity lines, CDs, savings and checking services and lot more are also provided by the company.

Chase provides the wealth management as well as knowledgebase too. There are different facilities and offers that are provided by the company with its Chase Platinum Credit Card and Chase FreedomSM Credit Card. The facility of no annual fee and 0% intro APR are provided to the Chase FreedomSM customers. One percent of cash back offer is also provided by the company.

The earning caps or spending tiers are not applicable throughout the transaction. After first purchase, 50 percent of money is given as cash back to the customer. Apart from the facilities provided in the Chase Platinum Credit Card, you also get 24 hours online account access. It also provides rental car insurance and world travel accident insurance. However, no annual fee is applicable in this process.

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USA’s Chase Auto Insurance

Auto insurance is among the main expenses in a United State’s household budget. Expenses comprising the budget may include not only food and basic provisions but also auto loans and health insurance payments which are mostly a monthly basis. And if each household with the everyday increasing expenses will not practice some helpful financial savings methods, these expenses and prioritized payments will not be covered appropriately. One example of a useful money saving practice is by maintaining a well budgeted finances and finding affordable payments terms such as Chase Auto Insurance.

If loans are not paid on time, your collaterals are sure to be lost and reposed by the firms. For this reason, loans are prioritized in the budget. Consequently, paying loans on time will make for a good credit history which will be very useful in borrowing money in the future. Therefore, monthly expenses should be organized and managed very well to avoid unnecessary financial problems in paying loans and insurances. Lowering the monthly expenses is also made possible if cheap auto insurance premiums such as the Chase auto insurance are obtained. Different factors and means contribute to finding a cheap auto insurance.

One way is to perform a research prior to purchasing the best car insurance deal. For example if you find an interest in Chase auto insurance, study it first and find out if the bank or the company offers a definitely advantageous insurance premium rates for your own vehicle. Read about what company or bank rules are implemented should insurance charges be cancelled, or if there are available discounts offered. But caution should also be practiced while searching and window shopping for auto car insurances as this is a perfect opportunity for fraudsters to exploit naive clients. Insurance swindlers would assert that the rates they offer are very cheap and affordable. Some even say that clients will be given discounts in a form of a few months free insurance. What you need to remember is that there are also low-price insurance offers such as the Chase auto insurance premiums that are legitimate and in accordance with existing financial regulations and that it can benefit a person or a household’s budget on a long term basis.

Insurances for new vehicles like Chase Auto Insurance are meant to appropriately cover different areas of concern. The value of a car depreciates over time and the premium payables must also be adjusted. Deductibles and coverage too have to be reviewed. Deductibles are payments for accidents; the insurance firm repairs the car.

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Car Loans With Bad Credit and No Down Payment – They Do Exist!

Finding funding to buy a car is almost as major a task as finding a mortgage to buy a home. This is the case even for those of us lucky enough to boast a good credit rating, so for those with low credit scores and with no lump sum to use as a down payment, it is surely impossible. But, getting auto loans with bad credit, and with no money for a down payment, is possible.

It might seem that car loans with bad credit are foolish for lenders to offer, but it is also true that not all bad credit ratings are a result of irresponsible money management. In many cases, it was something out of their control, with the state of the economy leading to reductions in income and even unemployment.

However, when it comes to getting approval on auto loans despite poor credit, there are some specific aspects that must be considered. And, top of the list is that fact that sourcing a financing deal from the car dealer is not a good idea.

Why the Dealer is a Bad Choice

It stands to reason that when someone knows their credit rating is bad, they will take the first available financing option. Often, the dealers themselves are willing to grant the loan to make the car yours. But the issue of car loans with bad credit should not drive an applicant to the dealer option.

The reason is that dealers charge higher rates than even the traditional lending institutions. A bank might issue car loan with a high interest rate, but the dealer will tag on an extra 2% or 3% to up their own profits. This is common in the car trade, with many dealers stating it is to cover their own admin costs.

But, the question is why an applicant is so willingly pay an extra $50 to $150 per month just to get approval on auto loans, despite bad credit. It would be better to just stick to the banks, in that case.

Why a Down Payment is Not Necessary

As we all know, a down payment is made to effectively seal a purchase, but it is also said to lower the actual loan sum needed and, therefore, the cost of the car loan with bad credit. But the truth is that there is no real benefit, and certainly no requirement, to make a down payment at all.

In general, car dealers will make every effort to increase their profits, so the down payment will actually go directly into their bank account. And because of the increased interest rate, the borrower will be paying close to the full sale price through their loan anyway.

It is a bad sign if a dealer is pressurizing a customer to make a down payment. So, it is probably best to take your business elsewhere. The good news is that there are better ways to get approval – namely, online lenders.

Online Lending Option

With traditional lenders so expensive (though less so than dealer financing) the terms of the car loans with bad credit available online are clearly the best to opt for. The fact is that online lenders are famed for their lower interest rates, and more flexible repayment schedules, so their loans are hard to beat.

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Improving Your Auto Loan Interest Rate

The auto-lending business is no different than any other form of lending. It is, and always has been about risk. Therefore the loan rate you earn for a major purchase, such as an automobile, is a moving target. The rate you earn partly aligns with your credit score, and partly aligns to other factors, such as income, percentage of other debt, money down, etc. The more you know about how loan-rates are assigned, the better you will be able to equip yourself to earn the best rate when you are ready to purchase a vehicle.

Here’s how you go about getting the best interest rate possible: Put the lender in a position of low risk and you will get a low APR.

Here’s a tale of two brothers who go to a local dealership, each looking to buy a used car. Tom, with a high 715 Beacon score has his eye on a five year-old sedan that will allow him to park the Hemi pickup that never met a gas station it didn’t like. Tom has never missed a payment in his life and has paid off most loans early. Brother Mark, armed with a 640 score crosses his fingers and hopes he doesn’t get his head knocked off with a high interest rate as he tries to buy a one year-old sedan. Mark had some slow pays back in the day, and a couple of medical charges that were paid off just before being turned to collection. Other than that he had a history of paying his current truck off with minor hitches. Tom, the 715, is looking to finance his third vehicle. Both he and his wife have new vehicles-Tom being on both loans. Brother Mark, the 640 score, will be trading in his ten year-old truck (paid for). They both have a similar home mortgages, but 640 Mark has no current auto loans and makes $2000 more per month than Brother 715′s modest salary. Finally, 715 Tom buys the five year-old sedan with a 120% carry (indicating that the loaned amount is 20% past the “book” value of the vehicle), while Brother 640 Mark puts $2500 cash down along with the $3500 trade-in value of his truck, giving him a total of $6000 down-which places his loan, 40% under book value.

Let’s compare: Tom has a high 715 Beacon score, but is asking for his 3rd auto loan. He brings nothing to the table in the way of cash down and needs to borrow 20% beyond the loan value of the vehicle. Finally, he is buying a 5 year old vehicle, which sends a red flag to lenders that there is a good chance he will be spending money on repairs. Brother Mark has a 640 score, but lays out $6000 on a one year-old, low mileage vehicle. His down payment places the loan request at 40 under what the banks deem his vehicle is worth at an auction. Who gets the better interest rate? Brother Mark…take it to the bank.

The lowest credit score I have personally seen, in all my car-selling years, was a deal we not only “got done”, it was a deal in which the buyer received a low interest rate. The main reason was that he purchased his used pickup with a very large down payment, so that the amount the lender loaned was considerably under book value. (He also made a decent wage and had a stable time of residence. If you’re a lender, where’s the risk? The buyer, in this case, could have skipped the next twenty payments while the repo guys chased him all over the country and the vehicle-when they found it-would still be worth more than what was owed.

Here’s some tips on keeping your interest rate low:

High Credit Scores: You think you are safe? Well, let’s suppose your grandpa to four of the sweetest college age kids you could imagine. You’re retired, so your income is fixed, and each kid, one-by-one comes to the well called Grandpa to get a co-signer for their auto loan. Grandpa never missed a payment in 40 years, but as the auto loans pile up, the rates get higher and higher because the exposure to the car loans, when compared to Grandpa’s income, make the loans more and more risky to the lender.

If your score is high, keep a balance to your loans versus income. If you co-sign too many times it may impact your ability to get a good loan.

Middle Credit Scores:

(1) Beware of the dreaded “negative equity” (the vehicle you are trading in is worth less than what you owe)…especially if you are putting no money down.
(2) Consider a loan that is fewer months than you might otherwise have taken. (The average auto loan is around 60 months. Lower that, to say 48 months-assuming the loan is manageable-and the loan becomes more attractive to the lender because the risk just went down.
(3) Consider paying more for a newer vehicle. As mentioned in the Tom and Mark story, most lenders raise interest rates as vehicles get older-due to the likelihood of car payment money being siphoned off to car repair bills.

Low Credit Scores:

(1) Have a large down payment.
(2) If you are on the brink of moving or changing jobs, consider buying your vehicle first, while your loan application shows longer job and residence time. Length of job and residence show stability to a lender, which lowers their risk-and your interest rate.
(3) If you were considering paying cash for a vehicle, consider using that money for a large down payment. Then
(4) pay the vehicle off earlier than the contracted length of the loan. This will place you in a position to lower your interest rate down the road.
(5) Consider paying a reputable company to “clean up” your credit report. Taking off bogus bad marks, and settling minor (negative) hits, could place you in a position to either get a loan that you otherwise might not have earned, or could place you in a bracket that lowers the interest rate you might otherwise have earned.
(6) Consider a co-signer (with good credit). (This won’t always lower your interest rate-especially if your credit is torched, but it may be the difference between getting a loan and not getting one.

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Why Does My Auto Loan Hate Me? I Thought We Were Friends!

Most of us fall in love with a car at a dealership and that’s the end of the story. Hey, where do I sign? Even if we do a great job of chipping away at the sticker price and feel pretty darn good about ourselves, we often get burned on the financing end of things. This is especially the case for people trying to score an auto loan with some bad marks on their credit report. Many times, these people are so surprised to hear that their auto loan has been approved that they sign on the dotted line before the dealer has a chance to change his mind! Only later do they realize just how poor they will be for the next 5 years because of the interest rate on that auto loan.

What are my financing options?

See, now you’re thinking! Impatience will cost you in the auto loan game – every single time. Potential auto loan sources include: a traditional bank, a credit union, financing through the dealership, and the newest darling on the scene – online auto loans.

OK, so what is the best option?

Well now, this all depends. How does your credit history look? If you have a mortgage and checking account with a traditional bank, then they will probably give you a great rate on your auto loan. The dealership will often find an auto loan for people with a poor credit history – but the cost of driving that car off the lot could eventually lead to even worse credit, when they have the car repossessed because they can’t afford the payments. The best place to shop around for the best rates on an auto loan is definitely online.

Uggh! I hate that stupid Internet! It takes me forever to find what I am looking for!

Oh come now – how long can it take to type “auto loan” into Google? If you don’t care about possibly paying thousands of dollars more in interest by letting the dealership “help you out” with financing, then by all means go that route. But, for people that want the best rate possible on their auto loan, the Internet is the place to start the search.

But how do I know that I can trust those Internet people with my financial info?

Very good point – and that is definitely something to consider. To begin with, many traditional banks offer online auto loan applications as a service to their customers, which also saves the bank processing costs. You can apply for Chase Manhattan auto loans online or down at one of their branches. In many cases you will find that banks offer these online loans at a smaller APR than you can get by actually going down to a branch. Chase Manhattan auto loans is one example of this, but many financial institutions offer their online customers a better rate.

Now why would they do that?

Not too trusting, are you? Hey, that is a great trait to have when shopping for auto loans – don’t forget it! What you are looking for is the catch, and here it is: In most cases, you will get a lower rate on your online auto loan because you will be required to sign up for automatic electronic payments. Plus, seeing a loan officer at the branch takes up the time of employees, and uses other resources that aren’t needed when you submit your application online. But remember, not all institutions offer lower rates like Chase Manhattan auto loans. And even Chase requires you to sign up for automated payments in order to get a break on the rate.

And what else should I know?

At the very least, shop around for rates on auto loans using the Internet before talking with the traditional institutions, such as bank branches or dealerships. Just knowing what kind of interest rate you can get on an auto loan can help you when you are down at the dealership drooling over that hot new car! Remember, knowledge is power – so don’t just walk into a dealership without knowing what kind of interest rate you can expect for an auto loan.

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The Benefits Of Getting A Personal Loan

A personal loan is usually not secured. It means collateral does not need to be provided by you when you borrow. The loan is offered to you by the lender on the basis of your credit and qualifiers. You can easily get the approval of loan, if you have a good credit. A lower interest rate can also be offered to you. Visit a financial institution or search online to get a personal loan.

Here is a list of some of the benefits of such a loan.

Lower interest rate – If you have good credit, then personal loans with lower interest rates can be availed by you. Around 15% APR on a credit card balance is paid by the people with lower credit card balance. But if you have good credit, you have to pay only 6% APR. While making a big purchase, it is considered as a big difference.
Use for many purchases – Your cash can be used by you for making any purchase. A loan of this type can be used even for purchasing a vehicle, starting a business or renovating your house. Restrictions may be placed by other types of loans on the usage of fund. But the conditions of using a personal loan are flexible and can be used for any purchase.
Consolidate debt – High interest debt can be consolidated by using a personal loan. Several smaller debts with high interest such as credit cards and student loans can be paid off by using a larger loan. Money on interest can be saved if you consolidate your debt by using this loan. Your debt repayment plan can be managed in a better way by combing several loans in one place.
Smooth your cash flow – Your cash flow can be smoothened by using a personal loan. A personal line of credit can be got by you, by using your personal loans. You have to pay a low interest rate in this alternate way of use. An emergency fund doesn’t need to be raised for future. The borrowed amount can be repaid by accessing your line of credit.
Boost your credit score – Your credit score is counted depending on your different types of accounts. One type of credit is represented by credit cards. In this case, you can use your credit score to handle your loans. Your score can be boosted slightly by adding instalment loans in your credit report.
Thus, save a huge amount on all your purchases by using a personal loan. Always remember to compare different loans before borrowing any sum.

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Five Reasons for Refusal of a Personal Loan

Don’t you wish personal finance were a mandatory course in college? Unfortunately, too many of us learn by mistake. When you need a personal loan and are rejected, you might be baffled as to what went wrong- and how to fix it. Here are some clues.

NO CREDIT

No credit is a situation where you have never used credit and therefore have no credit history for the bank to review. They have no way of making an educated decision on whether or not you will pay back a personal loan based on your credit history. No credit is worse than bad credit. Qualifying for and making regular payments on these types of introductory forms of credit can overcome a “no credit” score:

· Student Loans

· Secured credit card (includes a down payment amount)

· Being added to a parent’s or spouses good credit: card, car loan, etc.

LOW CREDIT

Low credit takes on several forms. If you’re using more than 30% of your allowable debt, it can negatively impact your score. Too many inquiries from shopping around for loans will also hit you hard. Lapses in payment, defaults, or bankruptcies are giant red flags and can take a long time to rebuild from.

Other things that lenders may look at are whether or not you have sizeable assets should you default on the loan. They also check to see if your debts are diversified or if you are only carrying one type of debt.

INCOME

Proof of income is generally required when applying for a personal loan. If you are unemployed or underemployed, it can work against you in the loan approval process. Lenders may also require a work history to see how long you have been with your current employer, and to determine if you typically have job stability. Frequent job loss or change will tell a creditor that your payments may not be reliable.

PURPOSE OF THE LOAN

Believe it or not, your application can be rejected due to your proposed purpose for the loan. Financial institutions have the right to set up the parameters surrounding their disbursements and can accept or reject your application based on what you want to use the money for.

BLACKLISTING

If you’ve defaulted on debt before, your name may be put on a list of whom not to loan to,’ also known as a “Blacklist.” This will follow you around for a long time and is difficult to erase. If you do resolve the debt issues, get documents to prove the resolution.

NO CREDIT CHECK LOAN

If you need a loan now, but are concerned that you might not qualify for a personal line of credit, you can qualify for a No Credit Check Loan. You could be on your way to a better financial future in no time!

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A Latin Impact on the Finance Industry

Financial Institutions are a fantastic business model to learn from when considering ever changing market conditions. Their traditional target markets are stable, but, the needs of an emerging market, the Latino market is extremely underserved. It is certainly not for lack of money. Many Latinos have zero debt and healthy saving habits. The question arises, are financial institutions doing enough to serve this population? Are they adapting to the Latino needs? The answer is complicated.

There are two types of Latinos in the USA. One is the immigrant seeking a better life and wanting the American dream, whether they came through the proper channels or not it is irrelevant. The second, are the Latinos that are born here. These are two very different groups of people with different needs and goals. Most immigrants bring their culture, traditions, and customs with them to the US. Those born here develop a blended culture that is both Latino and American.

Financial Institutions are taking notice and making strides to accommodate this very economically influential population. The main reason is that there is a lot of investment in education and developing trust. An untold detail is that in Latino countries, people do not trust banks and financial institution because of corruption. Everything is paid in cash and there are no debt or traditional credit scores. This means that the Latino community have cash, probably stored under their mattress or in a shoe box. This is very dangerous considering that a house fire could burn an entire life savings. Another scenario is they could become a target for robbery. This is a foreign concept for Americans. What is happening is a huge learning curve, educating them on the process of building credit, saving their money in a financial institution, getting loans (mortgage, car, etc.), and most important having trust in the financial institutions.

The younger generations that are born here learn from their parents and surroundings. There is still a disconnect from the importance of financial products, building credit, and how that process works. Many of these young people are just translating for their parents, explaining financial products, and become an intermediary for conducting business. You will notice an increase in bilingual support at many financial institutions for this reason. There is still a lot of work to do in this regard, and this process will take time.

However, more and more financial institutions are offering products specific to Latinos. Information is becoming available in Spanish and more financial institutions are hiring bilingual and multi-lingual speakers. It will be interesting to see how we as a country adapt to this important demographic. It is truly an untapped market that has an important function in our economy for growth and stability.

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6 Home Loans Tips Before Applying

Applying for home loans could be dreadful, particularly on the off chance that you are a first-time home purchaser. There’s a considerable measure of printed material and indulgent preparing included. Yet at the same time, it is justified regardless of your exertion. This far reaching contract aide will walk you through the way toward securing financing for your home and make you feel that applying for a home loan is not that horrible all things considered.

1. Know about them Lender or Broker?

There are two approaches to apply for a home loan. To start with, you can manage a loan specialist or home loan organization straightforwardly. Second, you can procure a home loan representative who will help you look over an assortment of moneylenders. Most homebuyers think that its less demanding and less expensive to choose a loan specialist, without assistance from the outsider. In addition, with a specific end goal to locate an equipped and solid agent, you should do a really decent research and get references. That is the reason a great many people like to keep it straightforward and manage a bank themself. In a few circumstances, be that as it may, merchants can really work to support you. For instance, if your record of loan repayment is not all that good, an accomplished dealer might be exceptionally useful in shopping and arranging for the most ideal arrangement.

2. Know the True Rates

The publicized rate frequently snatches borrowers’ consideration yet it is really not the one that borrowers ought to depend on. The AAPR or “the genuine rate” is a much better guide, as it checks every one of the expenses and charges that will happen over the term of your loan. In spite of the fact that the AAPR is a stage up from the publicized rate, it is still only a quantitative device. Once you’ve chosen a couple loans in view of their AAPRs, you will at present need to investigate their different elements. Some worldwide think-tanks, for example, CANNEX and AIMS Home Loans can outfit you with some canny data about mortage loans and help you limit down your choices quicker.

3. Know about loans details & terms

When you search for a home loan and read through various home loan terms and conditions, you will go over money related wording that you most likely won’t discover somewhere else. It is critical for you to comprehend those home loan terms with the goal that you can secure the most ideal arrangement. Truth be told, numerous money related foundations and land firms offer free homebuying workshops, which can help you comprehend what individuals are discussing in land business. Here are some fundamental home loan terms that you ought to know:

APR – Yearly rate, expected to mirror the yearly cost of acquiring. It is otherwise called the “promoted rate” or “feature rate”, that ought to make it less demanding for borrowers to think about moneylenders and loan alternatives.

Closing Costs – Shutting costs incorporate “non-repeating shutting costs” and “prepaid things.” Non-repeating shutting expenses are any things to be paid only once as a consequence of purchasing the property or acquiring a loan. Prepaid things are things which repeat after some time, for example, property charges and mortgage holders protection. Normally a moneylender should gauge both the measure of non-repeating shutting costs and prepaid things, then issue them to the borrower inside three days of accepting a home loan application.

Collateral – An insurance is the thing that you use to secure a loan or ensure reimbursement of a loan. In a home loan, the property is the security. The borrower will lose their property if the loan is not reimbursed by assentions of the home loan.

4. Check Your Credit

When you apply for a home loan, your whole record as a consumer will be investigated by your forthcoming moneylender. FICO ratings more than 620 have a decent risk of getting affirmed for a home loan with a decent financing cost. On the off chance that your score is beneath 600, in any case, your application might be denied or you may get affirmed at a much higher loan fee. Whether you have a decent or terrible financial assessment, what you ought to do is check your credit report before your bank does. You can get your credit report from Equifax, Experian and Trans Union. In the event that there are any mistakes, attempt to contact these three organizations and clear them up. This procedure can take a great deal of time, so it is something you ought to do a while before apply for a home loan. Paying down your budgetary commitments, for example, Visa obligation and auto loans, before applying for a home loan is additionally an extraordinary thought.

5. Don’t afraid from your bad credit score

Regardless of the possibility that you have an awful financial record, you ought to in any case glance around for the best arrangement. Don’t simply expect your lone choice is a high-taken a toll loan. On the off chance that your credit issues were created by unavoidable circumstances, for example, ailment or a brief loss of pay, disclose your circumstance to the loan specialist or intermediary. Ask a few banks what you need to do keeping in mind the end goal to get the least conceivable cost.

6. Verify and clarify all the things

A pre-endorsement letter is extremely useful, yet not as awaiting as you may think. When you locate a home you’d like to purchase, and your offer has been endorsed, you will need to do a reversal to the moneylender and submit archives that confirm your monetary data to get a loan. Your benefits will be assessed. The loan specialist will investigate your work history. You ought to have no less than two years of business history in the same profession. On the off chance that you are new to the work power, advanced education may help you get endorsed. In the event that you don’t have a sufficient record as a consumer, you may utilize normal regularly scheduled installments, for example, lease, telephone, or satellite TV to demonstrate the loan specialist that you are a reliable shopper.

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The Role of Islamic Finance in Economic Stability and Social Justice

One of the most distinguishing times for the U.S. Islamic home financing industry began in February 2007. The Federal Home Loan Mortgage Corporation (Freddie Mac) sent out a press release announcing that it would no longer buy the most risky subprime mortgages and mortgage backed securities. Two months after the announcement, a leading subprime mortgage lender filed for Chapter 11 bankruptcy protection. Three months after that bankruptcy filing, nationwide financing entities warned of “difficult conditions” ahead. Manifestations of such difficult conditions appeared on the horizon of the financial market when once well-established mortgage companies suddenly began to file for Chapter 11. Similar circumstances reached the U.K. as the Bank of England cleared an authorization to provide liquidity support to Northern Rock, the country’s fifth largest mortgage lender. Five months later, Treasury of the United Kingdom became the owner of Northern Rock.

Up until that point, the gravity of these “difficult conditions” was not fully understood by most of the populace. Late in 2008, the Federal Reserve Bank of New York was authorized to lend $85 billion to the AIG. This was the beginning of the most serious recession in the United States since the Great Depression. What followed was a chain reaction that led to an unprecedented global financial crisis, as the world suffered from rising unemployment, rampant foreclosures, and severe skepticism of financial instruments.

This led to a renewed spotlight on an unfamiliar market segment that appeared comparatively more stable and, more importantly, far more ethical: the Islamic financing sector. From the financial centers in Malaysia to the Middle East, spanning across over seventy countries, Islamic finance in the U.S. increased from $5 billion in the 1980s to $1 trillion in 2010. This phenomenal growth caught the attention of global investors who were seeking to safeguard their investments through more ethical and reliable financial instruments. When financial sector workers realized that these Shariah-compliant instruments avoided many of the worst effects of the global financial crisis, it became an attractive investment vehicle to support a more diverse portfolio. The Shariah-compliant financial sector has avoided investment in predatory lending businesses and overly leveraged financial instruments due to the strict ethical nature of the Shariah governance system. News and media outlets started to cover this ancient yet unfamiliar industry in hopes of learning from the mistakes of the conventional banking sector.

The concept of the modern Islamic financial services industry is rooted in the principles of Islamic legal jurisprudence that deals with financial transactions, a branch of Islamic jurisprudence called Fiqh Al Muamalat. Fiqh Al Muamalat is a framework under Islamic Law that charts the conduct of Muslims in commercial or economic endeavors. Islamic finance products and rulings are based on specific injunctions from the Quran that prohibit certain features of financial transaction models and related economic activities.

The Quran forbids interest, also called usury or riba. The underlying reasoning is that Islam considers lending to be a charitable act to help another member of the society in his/her time of need – therefore, profiting from someone’s hardship is strictly forbidden. In the conventional banking system, when interest is charged on a loan, the risk of that transaction is transferred to the borrower while the lender gains profit from the interest-based transaction. There is no consideration for the hardships endured by the borrower in the event they undergo any loss from the transaction.

By its nature, Shariah law prohibits unethical financial practices. It also promotes wealth distribution among all people to reduce poverty and inequity. This is manifested in the prohibitions of activities such as excessive speculation, gambling, and investing in products that are harmful for society as deemed by Islamic law (alcohol, pornography, etc). The structure of Islamic financial products and services, especially its prohibition in speculative transactions, has helped the industry escape most of the adverse effects of the global financial crisis. The governance model of Islamic financial institutions has been praised as an ethical alternative by institutions such as the International Monetary Fund and the World Bank. Economic experts have suggested that Islamic financial principles can be leveraged to promote financial inclusion that uplift the quality of life in developing nations. Islamic financial principles can also contribute to financial stability and economic development around the world.

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