Assalamualikum, I think this is haraam but can you please verify it for me? A person sets up a savings account from which he recieves a certain amount of interest. The person then takes out a loan to buy a car, house, etc. and uses the interest he had earned from the savings account to pay off the interest on the loan.
Answer
(Fatwa: 734/551=L/1430)
The Quran and Hadith give stern warning about having interest-based dealing. The Prophet (صلی اللہ علیہ وسلم) cursed those who take interest, give it, write it and bear witness to it. (Mishkat 244) Therefore, taking loan for purchasing car or house is unlawful. But, if car or house was purchased through bank in a way that the additional amount of interest is included in the total price and then the bank sells it to you and you pay the total price in instalments, this way is lawful. If someone purchased car or house on loan unknowingly, he can pay the interest amount with the interest gained in saving account.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband