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Halal Options for Motor Vehicle Leasing: Seeking Your Advice

Answered as per Hanafi Fiqh by Muftionline.co.za

Q: I am writing to seek you advice in relation to procuring a motor vehicle using a leasing arrangement. Which (if any) of the following options are a halaal option of buying a motor vehicle through a salary packaging arrangement?

Novated Lease

Finance Lease

Hire Purchase 

Chattel Mortgage

In particular, I wish to know if Novated Leasing is Halal? While you may already be aware on how Novated leasing work, however I ahven taken the liberty of copying and pasting an explanation from the internet for your consideration (which is exactly how it works in my current place of employment);

Novated Lease Explained:

“A novated lease is a three-way agreement between an employer, employee and a financier whereby an employer leases a car on behalf of the employee. A car is leased in your name and running costs such as fuel, insurance and maintenance are all included in a single lease repayment, paid for using a combination of your pre and post-tax salary. This means you could reduce your taxable income and pay less tax”

If none of the above are halal, please advise of an alternate halaal finance option applicable in the West. I look forward to your guidance in this matter.


A: What you have presented seems to be right. We do not know if there are any other clauses attached to these agreements.

And Allah Ta’ala (الله تعالى) knows best.

Answered by:

Mufti Ebrahim Salejee (Isipingo Beach)

This answer was collected from MuftiOnline.co.za, where the questions have been answered by Mufti Zakaria Makada (Hafizahullah), who is currently a senior lecturer in the science of Hadith and Fiqh at Madrasah Ta’leemuddeen, Isipingo Beach, South Africa.

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