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Car on finance

Answered as per Hanafi Fiqh by Tafseer Raheemi

I am thinking of purchasing a car on finance. The terms of the deal are you pay an initial deposit which is non-refundable and then pay monthly installments for 3 years and they are offering free insurance and road tax. You do not own the car at the end of the contract but you can exchange the car for new one and keep paying monthly installments. Is this type of transaction allowed in sharia.

Answer: Yes, it is allowed, as long as the total payment is known and interest is not involved.
This is due to not having enough money to buy the car, and in the shariah there is plenty of flexibility for those who are not well off.

This answer was collected from Tafseer-Raheemi.com the official website of Sheikh Abdul Raheem Limbada (Hafizahullah) of UK.

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