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Buying a Car Through Interest Based Financing

Answered as per Hanafi Fiqh by ShariahBoard.org

Assalamualaikum Warahmatullah 

I want to buy a car but the seller is charging a 3% interest rate in order to finance it. Is it permissible to buy out the rate of interest which would mean that I will have to calculate the total amount of money the seller is charging as interest, then add it to the base price of the vehicle and then calculate a monthly payment for a decided number of months on this amount?

Buying a Car Through Interest Based Financing

Walaikumassalam Warahmatullahi Wabarakatuhu

الجواب وباللہ التوفیق

Just by dividing the amount into installments does not save you from getting involved in interest. The best possible solution is to pay off the car in one payment. If you cannot afford one big payment or have any other issue in doing so, then make an agreement with the seller at the time of making the purchase on the total cost (including any interest). For example, if the total cash payment comes out to 50,000 but in buying it on installments the total cost comes out to 60,000, then the agreement should be made on the total amount i.e. 60,000 and the buyer should ensure to make the payments on time. If you are buying a car through a bank’s involvement, then the ulamah kiram have described the provision of its permissibility that the bank should buy it first or you should buy it and sell it to the bank and then again buy it from the bank. While selling it to you, whatever amount of interest the bank wants to include in the selling cost it should include in the total cost. Once the total cost has been calculated it should be divided into installments and then the buyer should start paying off the installments and ensure that these payments are made on time.

قال اﷲ تعالیٰ: وَاَحَلَّ اللّٰہُ الْبَیْعَ وَحَرَّمَ الرِّبَا ۔ [سورۃ البقرہ: ۲۷۵]سلعۃ یکون ثمنہا مائۃ دینار نقداً، وبمائۃ و خمسین إلی أجل أن ہذا جائز۔ (کتاب الحجۃ علی أہل المدینۃ ۲/۶۹۴)البیع مع تأجیل الثمن و تقسیطہ صحیح۔ (شرح مجلہ، رستم مکتبہ اتحاد ۱/۱۲۴، رقم المادۃ: ۳۴۵۵)

إن نظام البنوک الرائجۃ الیوم الذي یسیر علی أساس الربا لہ من المفاسد ما لا یعد ولا یحصیٰ، … إن الربا حرامٌ مطلقًا، سواء کان تعاملہ في دیون الاستہلاک، أو في دیون الاستشہاد۔ (تکملۃ فتح الملہم، کتاب المساقات / الحکمۃ في تحریم ربا الفضل ۱؍۵۷۵)المرابحۃ بمثل الثمن الأول وزیادۃ ربح … جائز۔ (الفتاویٰ الہندیۃ، البیوع / الباب الرابع عشر في المرابحۃ والتولیۃ ۳؍۱۶۰ زکریا)لو باعہ بربح … المرابحۃ نقل ما ملکہ بالعقد الأول بالثمن الأول مع زیادۃ ربح … والبیعان جائزان۔ (الہدایۃ، البیوع / باب المرابحۃ والتولیۃ ۳؍۷۳)

فقط واﷲ تعالیٰ اعلم بالصواب

This answer was collected from Shariahboard.org. It was established under the supervision of the eminent faqih of our era, Hazrat Shah Mufti Mohammed Navalur Rahman damat barakatuhum.

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