Full Lecture Transcript (Cleaned)
The Question — 0:00
Can I lease a car knowing that the company deals with interest?
This question was likely phrased incorrectly. The fact that the company deals with interest in its other business is not your concern. The Sharia looks at your specific transaction with them. If every company that has some interest in it is off limits, you could not shop at Walmart or any other major retailer. So that is not the issue. The real question is: does your transaction with them involve interest?
Scenario 1: Cash Purchase — Halal — 0:20
Obviously halal.
Scenario 2: Standard Fixed Lease — Halal — 0:40
A straightforward lease for a fixed timeframe and fixed monthly rate — this is like an extended car rental. You are not the owner. You are renting a car and paying a fee every month. Renting is completely halal.
Scenario 3: Variable APR Loan — Not Allowed — 1:00
This is where you purchase a car with a variable APR. The longer you take to pay, the more you end up paying. For example: if you paid cash today it would be $10,000, but paying over two years is $12,000, and over five years is $14,000. The total is not fixed — it keeps increasing based on time. This is the essence of riba.
Unlike the house (which we will address separately in a detailed lecture), the car market is so vast and the options are so many and the prices so varied that it is very difficult to argue genuine necessity. There are inexpensive used cars, there are short-term leases, there are other options. Therefore, the default that this type of transaction is riba stands, and no compelling case for necessity can be made for a car.
Scenario 4: Higher Fixed Price for Installments — Halal — 3:00
Now the big one. You walk into the showroom and there is a big sign: $10,000 cash / $12,000 installments over 3 years. You choose installments, you sign the contract, and that $12,000 is the agreed final price — no matter how long it takes.
This is called Bay' bil-taqsit in Arabic — installment sales with a higher price. This is the unanimous position of all four madhhabs and the explicit fatwa of the Majma' al-Fiqh al-Islami (the major global council of scholars in Mecca). It is halal.
The evidence comes from the Quran and Sunnah by analogy. The famous hadith of Barira where Aisha agreed to pay nine okiyyas of silver over nine years (one per year) at a higher total price. The Prophet himself purchased food from a Jewish merchant for payment at a later date, leaving his armor as collateral. The scholars noted that when someone defers payment, they typically charge a higher price in exchange for the wait — and this is permitted by the Sharia.
The technical term is Bay' al-Salam in reverse: since selling future goods for a lower price upfront is explicitly allowed in the Sunnah, the scholars said selling current goods for a higher price in installments is its exact opposite and equally valid.
The Conditions — 7:00
The critical condition is that the price must be fixed and agreed upon at the time of contract signing. You cannot have a variable price based on how long you take. It is either $10,000 cash or $12,000 installments — you choose at the showroom and sign the contract based on that choice.
The late fee clause is problematic. Technically a Muslim should not include such a clause in their contract. But just as with credit cards, one problematic clause does not void the entire contract. Your firm intention should be: I will never miss a payment. Set up automatic monthly withdrawals.
How to Negotiate This — 9:00
I did this myself when I last purchased a car. I went into the showroom and said to the manager: my religion does not allow a variable APR. I want a fixed, final price for installments — zero percent interest, just tell me the total and let me pay it over time.
Do not be embarrassed. Tell them you cannot have a variable APR in your contract. Money talks — if they know a segment of clientele will come if they offer this, they will offer it. I negotiated the price down first, then got a fixed total with installment payments and automatic withdrawal. No late fees, no APR, no ambiguity.
This is the fatwa of the vast majority of scholarly councils worldwide. I am not aware of any major council that does not allow a higher price in installments as long as the price is fixed at contract signing. And Allah knows best.