Assalamu alaikum,
I have a question about riba’.
Is it allowed to make a contract (for buying something) with following conditions?
– I like to buy a car from a car dealer.
– The bank I am going to decides to buy it from the car dealer
– the bank calculates interest an gives me 2 years to pay for the car
– In the contract is written “interest” but also the fix amount I have to pay after 2 years
(for example: car costs 10.000€ -> with interest 12.000€ -> so every month 500€)
– the bank owns the papers for the car till I fully paid the money, so I can’t leave the country
– I am allowed to drive the car in this 3 years
– if I dont pay, they will take the money from my bank
– if I am not able to pay, the car is sold to pay the debt
– if the car takes any damage, I have to pay for it
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
In order for us to advise you, answer the following,
1) Will the bank assume the risk of the car when it purchases it from the dealer before reselling it to you? If the car is stolen or damaged at that stage, who will be responsible?
2) Will you have the right to refuse to purchase the car after the bank obtains it? What will be the implications if you refuse to purchase the car from the bank at that stage?
3) Will you enter into a purchase and sale agreement with the bank at that stage?
4) If the car is sold by the bank and the bank recovers more money than it is owed, who will be entitled to the surplus?
5) Can you obtain the actual contract and forward it to us?
You may forward your response to admin@daruliftaa.net.
And Allah Ta‘āla Knows Best
Mehrazur Rahman
Student Darul Iftaa
Brooklyn, NY, USA
Checked and Approved by,
Mufti Ebrahim Desai.