What is the ruling on purchasing a car in installments from banks using one of the following two formulas: The first formula (collective): The employee pays 20% of the car's price as a down payment, and the remaining 80% is deducted directly from their monthly salary, provided it does not exceed 30% of the salary? The second formula (individual): The beneficiary pays no less than 30% of the car's price into the bank's account, and the bank pays the remaining 70% to the seller. The beneficiary then agrees with the bank to repay the amount paid by the bank over 48 months with a known interest (for example, if the car's price is 100 dinars, the person pays 30 dinars and the bank pays 70 dinars, and the bank recovers 81 dinars after 4 years, making the car's price 110 dinars), knowing that this contract is called Murabaha?
Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 2026
It is not permissible to purchase a car through the mentioned methods because the bank stipulates an upfront payment of part of the price (20% or 30%). This involves two prohibitions: the first is that it is a loan that draws a benefit, which is forbidden; and the second is that the bank does not purchase the car but rather pays the remaining price on your behalf, which is clear usury (riba). However, if the bank were to purchase the car as a joint ownership between you and the bank, according to what each of you has paid, and then the bank sells its share to you at an agreed-upon price, then there is no harm in that.
Summarized from the full answer at Ftawy · imported
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