Question:
Is it permissible to buy a car with DND auto world with no down payment and monthly installments?
100% financing options is available so I would like to I know if transaction would be considered as interest.?
Accordin to my knowledge it will be provide a loan from bank & mostly bank does charge interest..
So I would like to know more information about it and what does Islamic rules says in this condition jazakallah khair.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
At the outset, we commend you for your interest and sensitivity on adopting halal and abstaining from haram.
As you mentioned, the financing offered by the vehicle companies via banks is generally an interest based loan, which is Haraam and must be avoided.
If one is unable to find a vehicle dealer who is ready to sell the vehicle on installments (without financing from a bank), then the only option is to approach the financing bank and ask for them to fully purchase the vehicle from the dealer, then resell you the vehicle on installments (accordingly the bank will still make their same profit).
If the seller himself sells the vehicle on fixed instalments and charges a price higher than the cash price, or the bank itself purchases the vehicle from the seller, and after having its ownership and possession, resells it at a higher price to the customer on instalments, the transaction may be valid in Shari’ah, if the necessary conditions of sale are fully observed[1]. In the enquired case, if the purchased item, for example the vehicle, is financed by the bank, that is clearly an interest bearing transaction. Merely making timeous payments does not render the transaction permissible.
The vehicle is never purchased by the bank, nor does the bank sell the vehicle to the customer. The customer purchases the vehicle from a third party and owes its price to him. The bank comes in only to finance the buyer on the basis of interest. Therefore, this transaction is a Riba transaction which is strictly forbidden.
However as Muslims, even in the absence of proper Halal alternatives it is imperative we strive to abstain from Haram. The Muslim community should also endeavor to provide such Halal solutions for the Muslim community. We hope and make Dua that in the near future there will be such resources available for the Muslim community.
And Allah Ta’āla Knows Best
Mufti Arshad Ali
Darul Iftaa, Jaamia Madinatul Uloom (Trinidad)
www.fatwa-tt.com /www.jaamia.net
[1] In principle, it is permissible to sell or purchase a commodity on fixed instalments at higher price than the cash price on condition that the deferred date of payment and price is predetermined and agreed upon at the time of contracting the sale.If upon the delaying of payment, the client is required to pay interest, it would be permissible for him to enter into such a contract on condition-
a) He has a clear intention that he will always pay the instalments promptly.
b) He has a good reason to believe he will never become a defaulter and never have to pay interest )Contemporary Fatawaa (Mufti Muhammad Taqi Usmani) pg 200,211)
