What is the ruling on buying a car through a bank?

Question:
May Allah reward you. The Honorable Shaykh says: You mentioned in last Friday's sermon some of the forbidden earnings, including what banks do when a person wants a car. They send him to the dealership, ask for his information, then give him the amount to buy it with an increase. You stated that this is riba (usury or interest). I ask for further clarification on this issue. Also, is this not a case of salam (a forward sale paid in advance), rather than a sale?

Answer:
This is clear, my brother; it does not need clarification. It is clear that he bought the car, not the bank. He bought it, and they pay the price. The bank paid the price on his behalf as a loan, and he returns it with an increase. This is a riba loan. The bank did not buy the car, take possession of it, transfer it to its ownership and location, and then sell it to the customer. Rather, the customer goes to the places that have cars and has them write it in his name, the person's name. They get the price list, he pays the value, and they recover it with an increase. So the one who actually bought it is the customer, and the contract is in his name. The bank only paid the money as a loan, and this loan is to be returned with an increase.
This is not permissible. The bank did not own the car, did not take possession of it, did not transfer it, did not write it in the bank's name, and did not complete its procedures in the bank's name, such as the registration form and other things, nor the license plates to complete its possession. The bank does nothing but go and take the car, get the price list for him, pay it on his behalf, and then recover it later. This is not salam. Salam is when the value is delivered; the borrower delivers the value in the contract session for a commodity fixed by descriptions that do not change, fixed by descriptions. When the term arrives, the commodity is delivered. This is not salam. This is a present sale. It is not salam, and there is no described car, nor one fixed by descriptions, and the bank does not own it. So he sold what he does not own. In fact, he did not sell. He did not sell. He only delivered the value. He delivered the value on behalf of the buyer as a debt in his liability, to be returned with an increase. So this is a riba loan and is not permissible. The bank did not buy the car, did not take possession of it, did not own it, and did not complete its procedures. A fatwa has been issued by the Permanent Committee that this practice is not permissible, whether by banks or non-banks. This practice is not permissible.