Fatwa ID: 09481
Answered by Mufti Sakib Shadman
Question:
So _____ has to get a car, however we can’t afford to pay full price
There’s options of ‘halal financing’ they call it here
When i asked them how it works, they told me basically if a car is 10000, and the interest is say 2500, they charge you 12500 to pay and write down 0% interest and you pay off the 12,500 in some years
or you pay the 2500 upfront when purchasing the car and then slowly pay off the 10,000 and for that as well they put down as no interest
Is that still considered paying interest or its ok to do?
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
To issue a definitive ruling on the stated financial arrangement, our Darul Ifta would need to review the specific sale contract to ensure that all terms and conditions are Shariah-compliant.
In any case, charging a higher price for a car bought on credit compared to the cash price is permissible if the price is fixed (non-variable), and the instalments/term are predetermined. [1, 2] The car finance company calculates the amount of interest that they would typically charge based on your instalments, then they add this amount to the cash price. This amount becomes the fixed price for the car you purchase on credit. [3]
This arrangement is Shariah-compliant if both parties mutually agree to it. This arrangement is not tantamount to Riba (usury) because a credit sales transaction (with prompt delivery of the car) is taking place with fixed, deferred payment in instalments, as opposed to the company supplying you with a car purchase loan, to be repaid with additional interest charges.
Only Allah ﷻ knows best.
Written by Mufti Sakib Shadman
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
[1]
قَالَ (وَيَجُوزُ الْبَيْعُ بِثَمَنٍ حَالٍّ وَمُؤَجَّلٍ إذَا كَانَ الْأَجَلُ مَعْلُومًا) لِإِطْلَاقِ قَوْله تَعَالَى
Kitab Fath Al-Qadeer, Halabi ed., Daar Al-Fikr, 1970. Vol.6 p.261.
[2]
ويجوز البيع بثمن حال) وهو الأصل (ومؤجل، إذا كان الأجل معلوما) لئلا يفضي إلى المنازعة، وهذا إذا بيع بخلاف جنسه ولم يجمعهما قدر؛ لما فيه من ربا النساء كما سيجئ، وابتداء الأجل من وقت التسليم، ولو فيه خيار فمذ سقوطه عنده. خانية: ويبطل الأجل بموت المديون لا الدائن.
Al-Lubab Fi Sharh Al-Kitaab, Al-Maktaba Al-‘Ilmiyyah Beirut-Lebanon, 1392. Vol.2 p.6.
[3]
العبرة في العقود للمقاصد والمعاني لا للألفاظ والمباني.
Kitab Murshid al-Hayran, al-Matba’ah al-Kubra al-Amiriyyah, 2nd ed., 1891. p.36.