Praise be to Allaah.
This transaction is haraam and is not permitted. Basically
this transaction is a loan with interest, which is the essence of riba
(usury), because the bank gives the buyer a cheque for 100,000 and takes
payment for it in installments, adding interest and what they call
Calling this a purchase does not make it permissible, because
this deal is essentially a riba-based loan and not a sale or purchase. Also,
the bank is not buying the car from the showroom or selling it to the buyer,
rather it is giving him a cheque for that amount.
Buying products (whether cars or anything else) through the
bank is not permissible unless two conditions are met:
1 – The seller should take possession of this product before
selling it. So the bank should buy the car, for example, from the showroom
2 – The bank should take the car into its own possession by
moving it (physically) from the showroom before selling it to the customer.
If both or either of two conditions are not met, then the
transaction is haraam, and the reason for that is that when the bank did not
buy the car for itself in a real sense, rather it only issued a cheque on
behalf of its customer, that was a riba-based loan, because essentially the
bank loaned the price of the car (say, 100,000 riyals) to the customer on
the basis that it would take back 170,000 riyals.
If the bank buys the car then sells it before taking
possession of it, that goes against the words of the Prophet (peace and
blessings of Allaah be upon him) to Hakeem ibn Hizaam: “When you buy
something, do not sell it until you have taken possession of it.” Narrated
by Ahmed, 15399; al-Nasaa’i, 4613; classed as saheeh by al-Albaani in
Saheeh al-Jaami’, no. 342.
Al-Daaraqutni and Abu Dawood (3499) narrated from Zayd ibn
Thaabit that the Prophet (peace and blessings of Allaah be upon him)
forbade selling goods when they have been bought, until the merchants had
added them to their own goods. This hadeeth was classed as hasan by
al-Albaani in Saheeh Abi Dawood.
In al-Saheehayn it is narrated from Ibn ‘Abbaas that
the Prophet (peace and blessings of Allaah be upon him) said: “Whoever
buys food, let him not sell it until he has acquired it.” Al-Bukhaari, 2132;
Muslim, 1525. Muslim added: Ibn ‘Abbaas said: I think that this applies to
everything else – i.e., there is no difference between food and other things
in this regard. Based on this, the bank does not have the right to sell the
car until it has taken possession of it. Goods are taken possession of
according to custom, and taking possession of a car means that it is moved
physically from where it was. Shaykh Ibn ‘Uthaymeen (may Allaah have mercy
on him) said: “Whatever is moveable, such as garments, animals and cars etc,
possession is taken of it by moving it, because this is the custom. From
Sharh al-Mumti’, 8/381.
It says in Fataawa al-Lajnah al-Daa’imah (13/153): If
a person asks someone to buy a specific car for him or a car that has
certain features that he describes, and promises to buy it from him, and he
buys it and takes possession of it, it is permissible for the one who asked
for it to buy it from him after that, with cash or in installments for a
known profit. This does not come under the heading of a man selling
something that he does not own, because the one who was asked for the
product only sold it to the one who asked for it after he had bought it and
taken possession of it. He does not have the right to sell it to his friend,
for example, before buying it, or after buying it but before taking
possession of it, because the Prophet (peace and blessings of Allaah be
upon him) forbade selling a product where it was bought, until the merchants
had added them to their own goods. End quote.
With regard to the one who engaged in such a transaction in
the past, if he did not know at the time that it is haraam, and he did that
thinking that it was permissible, then he does not have to do anything,
because Allaah says (interpretation of the meaning):
“So whosoever receives
an admonition from his Lord and stops eating Ribaa, shall not be
punished for the past”
See also Question no.
But whoever did that knowing that it is haraam has committed
the major sin of riba and exposed himself to a declaration of war from
Allaah and His Messenger. Allaah says (interpretation of the meaning):
“O you who believe! Be afraid of Allaah and give up what
remains (due to you) from Ribaa (from now onward) if you are (really)
And if you do not do it, then take a notice of war from
Allaah and His Messenger but if you repent, you shall have your capital
sums. Deal not unjustly (by asking more than your capital sums), and you
shall not be dealt with unjustly (by receiving less than your capital sums)”
So he has to repent from this major sin, and resolve not to
do that again.
With regard to making use of the car that was bought in this
manner, there is nothing wrong with doing so, in sha Allaah, after repenting
and regretting. See question no.
And Allaah knows best.