What is the ruling on purchasing a car with financing from Dubai Islamic Bank, which takes profits and does not impose late payment penalties on installments, and if it is impermissible, is the car considered haram?
Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 2026
Islamic banks sell for a deferred price with an increase over the cash price, and this is a sale, not usury (riba). This differs from the conventional banks' practice of imposing a specific increase on the borrowed amount, which is interest. The amount in an Islamic bank contract is not subject to increase because it is a sale contract with a known price, unlike an interest-bearing loan whose interest increases with delayed payment. If the necessary conditions for the validity of a deferred sale with an increase are met, then the sale is valid.
Summarized from the full answer at Ftawy · imported
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