I am an 18 year old student in college. I work and go to school to help support my family and get an education. I drive about 80-100 miles a day and need a reliable car. I have the opportunity to get a reliable car but need to take out a loan from school to pay for the car. The only problem is that the loan has interest. The car I have now is almost 14 years old and has 172,000 miles on the clock. I was wondering if I could take a loan out for a new car. Jazakallah.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
It is not permissible to take out an interest bearing loan[1]. If you really need a new car then we advise that you save some money, sell your current car and buy a car that you can afford that will do the job required. If you do not have enough money, you may always ask a relative to lend you some money and draw up the terms and conditions to prevent a dispute.[2]
Alternatively, you may ask someone who has the funds to buy the car and gain ownership of it. Then you draw up a contract in which you agree to buy it from him over a fixed period of time. You may pay in a lump sum or in instalments- this is left to the discretion of the buyer and seller. The price, time of payment and profit margin must be bilaterally agreed upon by both sides.[3] This is the Islamic alternative to an interest bearing loan and is the most practical option if you want a new car.
We make dua that Allah the Almighty makes it easy for you to remain steadfast on his Deen and that he rewards you immensely for your patience, Aameen.
And Allah Ta’āla Knows Best
Mawlana Saanwal ibn Muhammad,
UK
Student Darul Iftaa
Checked and Approved by,
Mufti Husain Kadodia