Title: Is it lawful to finance a car from the bank

Question: Is it lawful to finance a car from the bank? If the car original price is 4 lakhs and the bank earned the profit and fixed the amount to 5 lakhs, and I am told to pay this 5 lakhs in installment (partly) of 36 months in equal amount. Please tell me, is this scheme valid according to Shariah?

Answer ID: 37290Posted on: Aug 31, 2020

Bismillah hir-Rahman nir-Rahim !

(Fatwa: 324/267/B=1433) It is not lawful to get a car financed by bank on instalments, as in this case one will have to pay interest on each instalment, which is haram. As it is haram to take interest, in the same way it is haram to give interest too. However, if you buy the car in a way that the bank declares the price of car and the total amount upto the last instalment including interest whatever it may be as the total price of car and you buy the car from the bank for the total price and then pay the price in instalments, then it shall be lawful. And thus you would be saved from the sin of paying interest.