Assalamu Alaykom Wa Rahmatu Allah All
I have received the following question, followed by my answer. Your comments
are welcome
Assalamu Alaikum, Pls I will like to find out the Islamic ruling regarding
"getting an interest loan from a car dealer?." And if it's prohibited what
other alternative do we have?. Jakallahu Khair!
Alhamdu Lillah
Your question about (getting an interest loan from a car dealer) has different
scenarios:
1- To do what is called in the industry (home finance), meaning that the car
dealer is the one who allows you making a payment plan or an installment,
obviously, without having a third party to play the role of the financier. This
scenario is allowed as there is no Riba involved, it is just an
installed-payment sale.
2- The above scenario is different if the car dealership has a sale department
& finance department. Usually those departments are two different entities,
financially and administratively. So, financing through the finance department
with 0% APR is acceptable as this islamically interpreted as (interest free
loan), but it is not the case if the loan is not 0% APR. Definitely, it is Riba.
3- To buy your car traditionally from a car dealer, where he connects you with
a bank or a credit company for financing purposes. Obviously, this scenario is
not allowed as the Riba is explicit in this transaction.
It is important to note here that the involvement of a third party to finance
is not prohibited if the financier bought the property for himself first and
then sold it to you for a higher price, but this is not the way it is conducted
here in the US. The financier lends you the money by paying it directly to the
car dealer on your behalf, and charges you what he paid plus interest
(interest-bearing loan).
A possible solution for any none 0%APR loan is to capitalize the interest by
increasing the total price from the beginning and make it 0%APR. Car dealers
usually have no problem with doing so and modifying the sale contract if you
offer them a good down payment.
(Late fees) is another concern in these transactions. When it is possible to
have a contract does not charge late fees; then you have to accept it. But in
the car dealership industry in the US, there is nothing like this. The contract
is a template/standard one, it mandates paying late fees when the monthly
payment is delayed.
>From a Fiqh perspective, and when the two contracting parties are Muslims;
>(late fees) are prohibited and should not-basically-mentioned in the contract.
>But when the contract is among the (dominating contracts) in which one party
>can not negotiate a minute like this in the contract; then having it is
>acceptable as long as the Muslim buyer is doing his best to pay on time, so to
>avoid paying late fees, or Riba in other word.
Dr.Main Al-Qudah
Assistant Professor of Islamic Studies
Imam, MAS Katy Center
Member, AMJA Fatwa Committee
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ترك ما عارض أهل السنة والجماعة... الاكتفاء بأمور ذات علاقة بالاقتصاد الإسلامي
وعلومه ولو بالشيء البسيط، ويستثنى من هذا مايتعلق بالشأن العام على مستوى الأمة
كحدث غزة مثلا... عدم ذكر ما يتعلق بشخص طبيعي أو اعتباري بعينه باستثناء الأمر
العام الذي يهم عامة المسلمين... تمرير بعض الأشياء الخفيفة المسلية ضمن قواعد
الأدب وخاصة منها التي تأتي من أعضاء لا يشاركون عادة، والقصد من ذلك تشجيعهم على
التفاعل الإيجابي... ترك المديح الشخصي...إن كل المقالات والآراء المنشورة تُعبر
عن رأي أصحابها، ولا تعبّر عن رأي إدارة المجموعة بالضرورة.
