Question # : 49560
India
We are in need to buy a car since it has become a necessity to us now. We cannot afford to buy by paying such an ample amount. So we are planning to take a loan from the bank. Agreeing to the fact that it is haram to give or take interest, looking at the previously answered questions in this category I have a clarification.
Suppose the value of the car is 4 lacs and the total amount including the interest is 5 lacs (which becomes the principle amount) if we opt for taking a loan, and we repay in the installments and the possession of the car will be with the organization (bank) until we repay the whole 5 lacs, in this scenario is it permissible to take a loan?.
Answer : 49560
Published on: Dec 4, 2013
بسم الله الرحمن الرحيم
(Fatwa: 87/89/D=01/1435)
If the bank, instead of paying loan to you, purchases the car itself and then sells it to you with additional price and you pay the price in instalments, then it is lawful. It means that the bank itself will purchase the car and after taking it in its possession, it will sell it to you. This is a fair transaction. But if it pays the loan amount in cash or cheque (whether it is in your favour or that of showroom), and then you pay to it in instalments with additions, then it is a transaction of interest which is unlawful. In this case, if the car is in the name of bank, then also it will be interest; since the car was issued in bank's name as security of the loan and in fact the bank did not buy it itself.
Allah knows Best!
Darul Ifta,
Darul Uloom Deoband
Question # : 12850
India
Assalam-U-Alaikum. I want to know whether there is a permission in Islam to purchase a car on Installments. As per my knowledge, under installment scheme, you are supposed to pay the actual cost fixed intrest per month. But the cost is predecided by the bank for eg. if the vehicle cost is 4 lakhs, and if you are paying the installments in 3 years, bank will calculate the intrest and give you the final figure of 5.5 lakhs. So the cost of the car is 5.5 lakhs for you, which you are supposed to pay in 3 years. But if you change your plan of making payment in 4 years, then the total value of car will increase. So Please let me know whether we can purchase a car on installment. I can not buy a car by paying entire amount in cash, and car is very important for me to buy. Will be thankful to you for your advise.
Answer : 12850
Published on: May 30, 2009
بسم الله الرحمن الرحيم
(Fatwa: 825/776=B/1430)
Before purchasing the car on instalments, if you agree and fix a period of 3-4 years and the total payable amount is also fixed and you tell him that, for example you are purchasing the car for 5.5 lakhs on the instalments of three years, so this transaction will be valid and lawful.
Allah knows Best!
Darul Ifta,
Darul Uloom Deoband
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