Purchasing Repossessed Vehicles

Our Darul-Ifta is of the opinion that purchasing such vehicles will not be permissible. We have cited references in our footnotes below as to why we do not deem this to be permissible, the crux of which is:-

(a)  First and foremost, entering into a transaction of sale wherein the seller imposes the condition that should the buyer fail to pay his monthly instalments, the purchased item will be confiscated from him and he will not be refunded the instalments that he has already paid in, renders the sale Faasid (corrupt). If this condition can be waived or somehow avoided, then too the following discrepancies tend to take place:-

(b)  When a vehicle is repossessed from the buyer, the bank does not refund to the buyer the instalments that were paid in and neither does the bank return to the buyer any monies that the bank recovers after auctioning the vehicle. This is in reality an injustice, that the vehicle (which in reality belonged to the buyer) is taken away by force and the owner gets nothing back in return (even after the vehicle is auctioned). More often than not, the bank (after auctioning the vehicle), recovers (together with the instalments that were paid in), much more than the original selling price, whereas the surplus thus received should be given to the owner/buyer, but this never happens.

As you can see from the references cited in the footnotes below from Fataawa Mahmudiyya, Aap Ke-Masaa’il, etc, it is not permissible to forcefully confiscate the sold item. By doing so, the seller has got back the sold item and at the same time also received some part of the purchase price (based on the monies realized from the auction together with the instalments received up to that point of time). This is incorrect that the sold commodity and the purchase price both come into the ownership of the seller. The seller should thus look for alternate ways to recover his money (by resorting to court action, etc).

If the buyer happily relinquishes possession of the sold item, then this will be regarded as Iqaalah, in which case if the sold item is still in pristine condition, the full purchase price ought to be refunded and if its condition has deteriorated (due to usage), then at least the market-related value ought to be refunded, but this never happens in the case of bank-repossessed vehicles. Due to this, the bank will be regarded as a usurper and by purchasing such vehicles, one is indirectly aiding the bank in usurping the rights of others. 

Due to the discrepancies and inconsistencies involved (as explained above), the best would be not to get involved in such transactions.