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Car Financing – Interest
Assalamalaikum,
May Allah shower his peace and blessings upon us all. I am wondering if it is halal to buy a car using finance. Financing a car involves putting some money down as a down payment and paying the rest off in terms of installments over the course of a few years. Obviously there is interest applied to this. Would it be sinful for us to purchase a car this way?
Thank you.
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4 Replies
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Car Financing – Interest
updated 3 days, 1 hour ago
2 Members
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4
Replies
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There is no interest involved in it. It is sale and purchase agreement. Bank purchase it and then sell it to you.
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The dealership I am buying the car through use terms like interest rate when coming up with my periodic payments to pay off the remaining value of the car. These payments add up to more than remaining value of the car. Does the additional value not come from involvement of interest?
Apologies if this is a stupid question. I am just trying to clear my doubts. Thank you. Allah bless you.
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This is the problem of wrong terminology. The reality of this transaction is not a loan, and the markup is not interest. Because interest or Riba is applied only to the loan money.
Plese refer to the following questions:
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I think I understand. Thank you! Allah bless you.
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