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Is buying a car in installments through a bank that adds interest to the original amount, and then waives this interest upon early repayment, considered a usurious loan? And what is the difference between this loan and an "Islamic loan" which does not waive the interest upon early repayment?

1 min readAlso available in العربية

Purchasing a car through a bank takes two forms: the first is forbidden, which is when the bank lends the customer a sum with an installment-based increase, and this is usury (riba). The questioner must repent and make immediate payment if the bank waives the interest. The second form is permissible, which is Murabaha sale, where the bank buys the car and it enters its possession, then it sells it to the customer for a deferred price. It is permissible to expedite payment without stipulating the waiver of a portion of the debt.

Summarized from the full answer at Ftawy · reviewed Sep 2, 2026

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