4 Benefits for Consumers who use Human Capital Mudarabah (HCM)

HCM allows people to raise money for themselves in return for committing to share a fixed percentage of whatever they earn (profit sharing ratio) for a fixed period of time in which they are working.

The benefits of using HCM financing include:

1. Affordable payments.

Payments are designed to stay affordable since funded individuals are obligated to pay a fixed percentage of their income rather than a fixed dollar amount.

2. Mentorship and connections.

Since investor returns depend on how well the financed is doing, investors will be motivated to help the financed advance their career through offering them mentorship and connections.

Note here that the financier has no authority to make decisions for the financed nor is allowed to offer unsolicited help. People receiving HCM financing are not giving up any control over their career or life decisions.

3. Breaking the debt cycle.

For those who are stuck in debt, refinancing with an HCM agreement will allow them to break the cycle of continuously accruing interest and debt obligations. This is because the period of working hours in which the financed is obligated to share their income in an HCM agreement is fixed.

4. Interest-free.

Muslim consumers who would like to adhere to Islam’s prohibition on paying interest now have a personal financing option with features that make it superior to debt.

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