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The short answer
In Murabaha financing the bank buys the item you want and sells it to you at its cost plus an agreed profit, which you repay in instalments; the price is fixed at the start, so there is no interest that grows over time. Jaiz Bank Plc, for example, describes its household appliance finance as buying the product and selling it to the customer at cost plus profit, repaid monthly over up to 24 months. To compare it with a loan, work out the total you will pay against the cash price.
What Murabaha is
Murabaha is a sale, not a loan of money. Instead of lending you cash and charging interest on it, the financier buys the asset you need (a fridge, a generator, a car, stock for a shop) and then sells it to you at a higher price. The difference between what the financier paid and what you pay is its profit. You repay the agreed sale price in instalments over a set period.
Non-interest finance is the wider family Murabaha belongs to. It includes leasing arrangements, partnership-style financing and other structures designed to avoid charging interest on money lent. In Nigeria, the CBN licenses non-interest banks and non-interest windows, and a few microfinance banks and cooperatives also offer cost-plus financing.
How a Murabaha deal runs, step by step
- You choose the item and get a quotation or invoice from a vendor.
- You apply to the financier with your documents and the quotation.
- The financier buys the item, often paying the vendor directly, so it owns the item before selling it to you.
- The financier sells it to you at a stated price: cost plus profit.
- You take the item and repay the sale price in agreed instalments. The price does not increase if rates in the market move.
The step that makes this a sale rather than a disguised loan is the third one: the financier must actually own the goods before selling them to you. If you are simply given cash and told to buy the item yourself, ask how the deal is structured.
How the cost is disclosed
Because there is no interest rate in the usual sense, the cost appears as a mark-up or profit figure, sometimes written as a percentage of the cost price, sometimes as a naira sum. What you should always be able to see before signing is:
- The cost price of the item (what the financier pays the vendor).
- The profit or mark-up amount.
- The total sale price you will pay.
- The number and size of instalments and the dates they fall due.
- Any other charges, such as insurance, legal or administrative fees, and what happens if you pay late.
The public listing for Jaiz Bank's Murabaha household appliance finance, as shown on nairaCompare in October 2026, describes it as 'cost plus profit', with monthly repayment from salary over a maximum of 24 months and salary domiciliation as a feature. It does not publish a profit rate, so you would need to get the figure from the bank. The listing's document requirements include BVN, valid ID, a recent utility bill, three months of stamped statements, passport photographs, signed post-dated cheques and two guarantors. Check the bank's current terms directly, as listings can change.
Worked example: comparing with an interest loan
Example only. You want a generator with a cash price of ₦600,000. A financier offers Murabaha at a total sale price of ₦720,000 over 12 months, so ₦60,000 a month. The profit is ₦720,000 − ₦600,000 = ₦120,000, which is 20% of the cost price, spread over a year.
A lender offering an interest loan of ₦600,000 over 12 months with equal monthly repayments of ₦58,000 would cost ₦58,000 × 12 = ₦696,000 in total, or ₦96,000 more than the cash price. On these example figures the interest loan is cheaper in naira terms, even though the Murabaha has no interest. If the loan's repayments were ₦62,000 a month (₦744,000 in total), the Murabaha would be cheaper. The fair comparison is always total paid against the cash price.
Things to ask before you sign
- Does the financier buy and own the item before selling it to me?
- What happens if I want to pay off early: is any of the profit reduced? Our guide on early repayment rebates explains how lenders approach this.
- What happens if I pay late? Some financiers charge a fixed late charge that goes to charity rather than to the financier; ask how it works.
- What security is required: guarantors, salary domiciliation, or post-dated cheques?
Other non-interest structures you may meet
Murabaha is the most common cost-plus product for household goods and stock, but it is not the only one. Ijarah is a lease: the financier owns an asset and rents it to you, sometimes with ownership passing at the end. Musharakah and Mudarabah are partnership-style arrangements in which the financier shares in a business's profit or loss rather than charging a fixed return. Each has different risks and costs. Whichever you are offered, ask for the total you will pay, how it is calculated, what happens if you pay early or late, and what security is required, and compare that total with any other option you have.
Where Pryme fits
Pryme's Savings Boxes include an Interest-free Box, which earns nothing by design and suits people who prefer not to earn interest on savings. Pryme makes no claim about religious certification. See Savings Boxes.
Questions people ask
What is Murabaha financing in Nigeria?
It is a cost-plus sale: the financier buys the item you need and sells it to you at an agreed higher price, which you repay in instalments.
Is Murabaha cheaper than a loan?
Not necessarily. Compare the total sale price with the total you would repay on an interest loan for the same item and period.
Which banks offer non-interest loans in Nigeria?
Non-interest banks and non-interest windows licensed by the CBN offer them. Jaiz Bank, for example, lists Murabaha household appliance finance. Check each bank's current terms.
Can I pay off a Murabaha early?
Ask the financier before you sign. The sale price is fixed, so whether any profit is reduced for early payment depends on its policy.
Sources
- nairaCompare: Jaiz Bank personal loan, household appliance finance (Murabaha) · accessed Oct 2026
- FCCPC: Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations 2025 (made 21 July 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.