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Is the leasing process allowed in Islam?

Answered according to Hanafi Fiqh by Askimam.org

I am buying a computer worth Rs 45,000/- but I am buying it through a leasing company. They will pay the price to the computer company. Then I will start giving monthly installments to the leasing company. The installment payment process will continue for around 3 years. In the end I will be ending up giving them around Rs 57,000/-. What I want to ask you is that the original price is Rs 45,000/- which will be paid by leasing company so I will have to give them Rs 57,000/- in monthly installments. The extra Rs 12,000/- will be their charges and other fees etc. Most of the Leasing companies keep 14% profit margin. Should I buy computer through Leasing Company or not?

Answer

In order for the transaction to be correct, the company may purchase the computer for Rs45000 and resell it to you for Rs57000.

The excess of Rs12000 will be profit and not interest. They cannot pay the Rs45000 for you and in turn you pay them Rs57000. In that case, the Rs12000 will be interest.

And Allah Ta’ala Knows Best

Was salaam

Mufti Ebrahim Desai

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This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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