What is the ruling on buying a car from a bank on installment, given that the bank does not own the car, and this is done with an increase over the car's original price?
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The questioner : Your Eminence, what is the ruling on taking a car on installment from the National Bank, knowing that it does not own it, but pays its value and buys it from the company, and then sells it to me on high installments with easy terms? This is because I am in dire need of installments. Does the ruling of riba apply to this?
The Shaykh : Yes, this is forbidden. This installment arrangement is forbidden. For example, a person comes to the merchant, whether a bank or not, and says, "I need a car with such and such specifications." He says, "Go to the showroom and choose the car you want." Then the person comes back and says, "I want this specific car." The merchant or bank goes to the showroom and says, "Sell him this car." He buys it from them for cash for fifty thousand, then sells it to the first person who requested it on installment for sixty thousand. This is forbidden and not permissible, and it is a clear stratagem to circumvent riba. Because this bank that bought it for him and then sold it to him is as if it lent him its value with an increase, and this is forbidden. The contract here is nominal, and were it not for the request for the car, the bank would not have bought it. Therefore, one must be cautious of this. Even if some people issue a fatwa permitting it, they have not reflected on the issue. If they had reflected on it, they would have found it a clear deception. It is more wicked than the deception of the Jews, who, when Allah forbade them fat, melted it so it became oil, then sold it and ate its price. So the Prophet (peace and blessings be upon him) invoked upon them that Allah (Mighty and Majestic) would fight them. This stratagem I mentioned is closer to being forbidden than the stratagem the Jews practiced. So the believer should fear Allah (Mighty and Majestic). If he says, "I did not find anyone," we say: Praise be to Allah, you have your clothes, and you have a dwelling, whether rented or owned, and this is sufficient.Sahih Muslim 2958a If you remain without eating except once a day and do not buy the car in this manner.
And with this, this meeting ends, for the time has come, which is the scheduled end of the session, and until a future session, if Allah wills.
The Shaykh : Yes, this is forbidden. This installment arrangement is forbidden. For example, a person comes to the merchant, whether a bank or not, and says, "I need a car with such and such specifications." He says, "Go to the showroom and choose the car you want." Then the person comes back and says, "I want this specific car." The merchant or bank goes to the showroom and says, "Sell him this car." He buys it from them for cash for fifty thousand, then sells it to the first person who requested it on installment for sixty thousand. This is forbidden and not permissible, and it is a clear stratagem to circumvent riba. Because this bank that bought it for him and then sold it to him is as if it lent him its value with an increase, and this is forbidden. The contract here is nominal, and were it not for the request for the car, the bank would not have bought it. Therefore, one must be cautious of this. Even if some people issue a fatwa permitting it, they have not reflected on the issue. If they had reflected on it, they would have found it a clear deception. It is more wicked than the deception of the Jews, who, when Allah forbade them fat, melted it so it became oil, then sold it and ate its price. So the Prophet (peace and blessings be upon him) invoked upon them that Allah (Mighty and Majestic) would fight them. This stratagem I mentioned is closer to being forbidden than the stratagem the Jews practiced. So the believer should fear Allah (Mighty and Majestic). If he says, "I did not find anyone," we say: Praise be to Allah, you have your clothes, and you have a dwelling, whether rented or owned, and this is sufficient.
is there anything as your belonging except that which you consumed, which you utilised, or which you wore and then it was worn out or you gave as charity and sent it forward?
ليس لك من الدنيا إلا ما أكلت فأفنيت أو لبست فأبليت أو تصدقت فأمضيتAnd with this, this meeting ends, for the time has come, which is the scheduled end of the session, and until a future session, if Allah wills.