The rationale behind the asset and vehicle finance platform is that the traditional banking institutions have very strict asset and vehicle finance rules in place which excludes a vast majority of the South African population or small corporates to own vehicles or assets such as renewable energy products. Currently only 20-25% of all applications into formal banking institutions are approved thus creating an increasing market for a Rent to Own business model. 

The public transport system in South Africa is not as efficient and reliable as in Europe or the United States and the South African middle class need motor vehicles to go to and from their workplace. 

Rihlat has identified a product for vehicle ownership for corporates and individuals who cannot qualify for vehicle finance according to normal vehicle finance or banking standards. There remains a huge demand for vehicles from corporates and individuals who can afford a deposit and monthly installments, but do not qualify for finance according to the normal banking vetting criteria. 

There is also a very big demand from SME’s who have very lucrative rental contracts with major blue-chip companies but because of a lack of balance sheet they also do not qualify for normal bank funding.

The Rihlat Vehicle Finance platform is a very innovative Shariah compliant investment product, offering investors the opportunity to invest in the vehicle finance market. 

Assets which the Partnership will acquire and lease to individuals and corporates will be in the following sectors:
• Passenger vehicles
• Commercial vehicles and yellow equipment
• Beneficiation plants in the mining industry
• Renewable Energy products such as batteries, solar panels and inverters
• Fiber portfolios

The Partnership’s mandate will be as follows:
• Minimum individual asset purchases: R50 000
• Maximum portfolio with one counter party: R80million
• Maximum payment terms: 30 days
• Profit share: minimum 13% and maximum 20%.

The investment product is based on a 12 month lock-in period, but the investor will be allowed to sell, exit or trade in their partnership portfolio within a special window after 12 months. The Rihlat ECP (investor) will have possession of the assets at all times in this window period. Rihlat will appoint a special agent to collect and deliver the assets to the ultimate leasing company.

The investment from the investor will have the following criteria and expected returns:
• Lock in period: 12 months
• Withdrawal notice: 2 months after 12 months.
• Minimum investment: R50 000
• Expected profit returns: 13-15%

Rihlat will distribute the profits to the investors based on the trading profits on a monthly basis.