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I’m considering to purchase a car with the possibility of making monthly payments/installments excluding interest.

Answered according to Hanafi Fiqh by Askimam.org

There are only two methods of purchasing a vehicle these days. First, have the entire cash at hand and pick up your car. Or, making monthly payments over time which bears interest, say 10%. I have spoken with a sheikh who stated that, the extra money or interest paid over time can be viewed as a service charge by the car dealer and hence becomes halaal. Is this true? In my case, I have found a dealer that is offering a payment plan of 0% interest rate for 4 years, after which, if balance is still due on the account, the interest will apply. If Allah wishes, I plan to complete my payments before the 4 year period is up. But I’m still signing a contract that states that I’m willing to pay interest if anything happens. Is such contract Haraam? Please advise on this matter, May Allah Be With you.

Answer

If you intend paying your instalments timeously and avoid paying interest,
you will be excused for signing that contract.

and Allah Ta’ala Knows Best

Mufti Ebrahim Desai
FATWA DEPT.

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