What is the ruling on buying a car from a bank that does not own it, on an installment basis?

Question:
Salim says: My salary is transferred to the National Bank, and I wanted to buy a car. The bank representative told me to go to the dealership and choose the car I want. I went to the dealership and got the car I wanted. The dealership said the car is worth seventy-seven thousand, and the bank takes three thousand five hundred seventy-five, which they add to the price. Honorable Shaykh, is it permissible to take this car or not?

Answer:
This is an invalid sale because the bank does not have cars. Rather, the customer goes and buys the car, and the bank pays the price to the dealer on his behalf, then recovers it from the buyer in installments with an increase. This contains two prohibitions and two dangers. The first danger is that the bank sold something it does not own before owning it. The second prohibition is riba (usury or interest), refuge with Allah, because it recovered the amount it lent to the customer. In reality, this is a loan, not a sale; it is a loan recovered with an increase, and this is riba. It is obligatory to avoid this practice. Do not buy a car except from a person who has cars. Go to a person who has a car or cars in his ownership and possession, and buy from him, whether for cash or on credit.