Ask Shaykh YQ – Episode 28 – Leasing A Car With Installment Payments at a Higher Price
Channel: Yasir Qadhi
Series: Yasir Qadhi - Ask Shaykh YQ
File Size: 14.25MB
Can I lease a car, knowing that the company deals with interest? Now, this is how the question was phrased to me, I think that the brother meant something else. Because leasing a car, because the company has interest, no scholar will say that it is held on that one
upon a gala, deja ilaria, no fee him.
No scholar would say that it is how long that you deal with the company that is doing doing interest. Because if you did that, then everything you buy at every shop would be harmed. If the company is dealing with interest, every company in North America pretty much has interest in it. You cannot go to Kroger's or Walgreens or Walmart or any you cannot do anything if you're going to go so I think the the question was phrased wrong, I think what he's asking is, if there's interest in the lease, I think that's what he's asking about as for the company dealing with interest is not our business is your transaction halaal, you don't have to worry about what the company is doing to
other people, you and the person, that's what the shediac is looking at, right. So,
let us look at a number of scenarios when purchasing a car obviously, outright cash, obviously, that is completely Hello, you come in, you purchase a used car $5,000 a brand new car, whatever, $15,000 $25,000 you pay your check, and you get a cash
check or whatever, and it is your car, obviously that is halat. The second scenario, leasing the car for a fixed timeframe. So this is a straight up lease, okay, which means who is the owner of the car?
The company, not you, when you lease the car, you are not the owner, it is a temporary lease, and you lease it for three years or five years at a fixed rate per month. This two is clearly Hello. It is like an extended rental car. And from your perspective, you are renting a car and paying a fee every month. This is the essence of rent in anything renting a house renting anything, this is also completely valid. The second scenario, the third scenario, which is I think what he was trying to ask, and that is you purchasing a car. But it has a fixed APR at the selling point. And you have the option to pay it off in two years, or three years or four years or five years. And the longer you
delay, the more you're gonna pay. Okay, fixed APR, and it's up to you, however long you take, the more you have to pay penalty. So theoretically, I'm just giving numbers hypotheticals, who understand if you walked out of the showroom, and you walked right back in, and you said here, here is the price, how much is it, he would say it's 10,000. You say, here we go. And if you paid over two years, you might end up paying 12,000. If you paid over five years, you might end up paying 14,000. I'm just giving examples, right? Same car. But you walked out of the showroom, if you walk back in 10,000. And if you do it one year 12 you get the point, right, so it's a fixed APR. And the
longer you delay, the more the debt, and the more the payment. This is the essence of Riba. And it would not be allowed, by and large, because there is no pressing need. I mean, generally speaking, there are so many options of buying a car, that the argument of low total or necessity really does not carry water over here, when it comes to the house we will talk about and I've been bombarded with questions for the last three months about mortgages. And it requires a detailed lecture and I will give it in sha Allah to Allah, that's a separate lecture. And who says is highlighted why they says hello, who says How wide is this? I don't we will go over all of these evidences. As for cars,
the issue with cars is that the market is so vast, and the options are so many. And the prices are so varied, that it is very difficult to imagine that a person is in a dire necessity that the only option they have is fixed APR and that is why the argument really does not carry much weight. And we say the default is that a fixed APR loan from the corporation from the car, you know, company is the essence of Riba that is forbidden upon Muslims to engage in that would not be allowed. Okay. Is that clear? Now we get to the controversial issue. You guys all on the same way. Thanks for paying attention. This is the big one. This is the difficult one. Bear with me. Okay.
it is a purchase of the car, but you walk in and there's a big sign there. Okay. Big sign
what car should I use?
to this tutor? Hmm. All due to the default distributor. You're not the proper one of us unless you drive a Toyota I choose over to the for a good portion of my life. Okay. I had a Cressida once upon a time as well like the default they don't do that anymore, right? They have no more hmm is gone. That was the mother of all cars, you could last that for 20 years. Okay, so you see the Toyota for 10,000 cash
12,000 installments, that's the big sign up there. If you want to buy it cash 10,000 and you want to pay in installments 12,000.
This is the issue where we will now spend the next five minutes then we're done for today. That's the controversy, the big controversy. And this is called in Arabic Bayer TOC sleety illa gel that deferred installment payments and at a higher premium and price. Okay. This is the area where there's some controversy now, you will be pleasantly surprised. And you will be surprised that you shall be pleasantly to hear that the default position of all four metal hubs is it is Halloween.
This is the default and the majority position explicitly narrated from the tab your own and it is the standard position of all four of our legal schools. And the reason for this is because even though this exact scenario is not mentioned in the Hadith, a number of similar scenarios are mentioned that are so similar. Our scholars said okay, that's exactly the same thing. And so they allowed it and it would with conditions so don't leave in the middle or else you're going to just go and buy the car tomorrow you have to get to the conditions don't don't purchase the car immediately. Let me finish and then celebrate tomorrow by purchasing the car. What are the conditions? It's just
said that when we freed buddy era, the freeing ability is a very famous incident one day we will talk about it when we fried buddy era. Her family agreed with me because she was the one who proverbially wrote the check anyway, metaphorically, she's the one who paid the money to everybody. When we fried buddy rock, her owners agreed with me to get her price nine or key of silver will pay yo was their unit of silver nine or P of silver every year I would pay one oltenia. Okay, so this is an installment plan, where I show the Lord is going to pay nine years of silver over nine years, one year for every one opia for nine years. Okay? Now, the point being that obviously, the price of
Madeira was less than nine. But the owners were willing to take an extended time, but they wanted more money to get buddy Ross price done. Okay, so maybe if Ayesha had cash, which he did not have at the level, I know if she had cash, maybe I'm just guessing six, Orpheus would have been a price. She doesn't know the owner does not have six years of silver. So she says okay, I'll pay you in installments. Right? And so they say okay, fine, how much final barter price they agree to nine, which is higher than what they would have paid by cash, but they're willing to compromise an actual the loan is compromising by paying one per year. So this is how we derive the other narration as
well. Again, I reported that the Prophet sallallahu alayhi wasallam purchased some food from yahoodi to pay at a later date, and he left his armor as a mortgage item for the food items that he had taken. Right. So this is a famous Hadith and when the process and passed away, the armor was still with the hoody, so they had to pay the debt and then get the armor back right now what does this hadith say? Again, our commentators or scholars say that at that point in time the process of did not have cash is upon Allah Luca Danny, how he used to live in mail over Willow May Allah forgive us? What can we say Mila, forgive us istockphoto did not have cash to pay food. So he says to this
merchant, look, whenever the cash comes, you'll get it. Okay, fine, but I need a mortgage. I need some item just in case you don't give me the cash. So the process Some said here, take my armor until the money comes. Now, once again, the commentators say that the only time somebody is going to hand over the product and say follow us pay me in three, four or five weeks, generally speaking,
and especially a person of another, you know, faith what not generally speaking, what would they do? They're not going to say if this price is five pay me if I say okay, how long if you really want it pay me seven then then I'll give it to you after two weeks. Okay? Now the point is, there's nothing
explicit, but it's understood that when these types of transactions happen, why would anybody he's going to get cash right then and there? Why would he not take cash from another person, everybody needs food, the only reason he's willing to not take cash, I'll get a higher price if you pay me later on, right? And the exact opposite scenario of selling for a lower price immediately is explicitly narrated and allowed in the sooner the opposite scenario of pre selling specific items for a lower price is explicitly allowed in the Sharia with some conditions and the Hadith in Bukhari and Muslim. When the Prophet sysem came to Medina. He found that the people of Medina would sell the
crops of the next season or two before the season came.
pause here this is a simple scenario but understand
you have What's your name, brother, huh? Hamza. Hamza has a date farm, right? And he can produce a ton of dates Mashallah diabolical. Okay. And the next year he produces he plans to produce a ton The next year, two tonnes that's two tons of dates. I want to make sure I get those two tonnes from him for the next two years. So I go to Hamza now I say a few Hamza, how much you're going to sell a ton of dates for how much is a ton of dates?
How much 2000 Mashallah, okay, this is free $2,000 you get a ton of dates. Mashallah, right now, we'll buy 10 tons from you, bro. If you if you can sell me a ton of dates for 2000 other fellows. He's very generous. He goes for $2,000 I can buy a ton of dates from him. I say here, here's $4,000 and you're gonna sell me the next two years of dates. Okay, now, this is an advanced topic. Generally speaking, you cannot sell something that you don't have. But some exceptions are made, in particular for farmers for future produce. Why? Because Hamza's farm is deteriorating, Hamza needs to purchase What do you need to purchase Hamza?
in installments, homes that needs to purchase a tractor. He needs to put irrigation pipes, right? He needs to make sure that everything he doesn't have the money for that. And farmers need the money to protect the crops. So it's a vicious catch 22 now I'm coming to Hamza, do you think Hamza will be able to sell me a ton of dates at market value right now, when he doesn't even have them?
No, he's gonna have to sell them What?
lower price because he doesn't have them. And I am risking a little bit and Hamza's sacrificing a little bit and we're both reaching a compromise. Our Profit System came to Medina and they were doing this he said whoever wants to do this transaction, then he must do so falu sloughi Kayla lumen was in my lumen a ledger amalgam everything has to be specific, how long the exact quantity the exact price no uncertainties you must say $2,000 for one ton of dates for the next harvest season must be very clear, you cannot be ambiguous about this okay. And it is well known that the price I would pay is less than the market value next year when he harvests the dates right. So, raising the
price jacking the price up in installments is the exact opposite This is called the or seldom or better seller very seldom is the technical term. So, based on class, they said to have a extended payments installments that is at a higher value than the cash is held. But with some conditions, and the primary condition is the following.
You decide at the time of purchase, whether it's going to be a cash or installments, you do not leave it uncertain, because then you have an element of rebar there you the person can advertise to prices, no problem, but you need to decide and the person has to agree before you walk out of the showroom, that whether is going to be the 10,000 cash or is going to be the 12,000 in installments and once that is decided then holiday that is the price. Now, there is one big problem that happens in this part of the world. And that is the late penalty fee, which is definitely problematic. And we say technically this is not allowed. But just like with credit cards,
the concept is hello this one condition is not allowed. So we do not make the contract invalid because of one of the final prints in there. And we say whoever is going to do a lease to own because that's what it is leased to own. Whoever is going to do a lease to own then they must have
Have a fixed final price, not an APR. It must be fixed, the price is $14,000. That's it, it's not going to vary from time to time. And they must be deciding when they sign the contract right then in there 10,000 cash 14,000 installments that can be advertised, you'd need to choose which one and sign the contract based upon either. And then it is an agreed upon between the both of you. So what this means that with this, I conclude.
And by the way, there's a really good book that's in very accessible Arabic, not in English, unfortunately, it is called beta toxic by one of the great economic items of our times. Dr. Mohammed, Dr. ryfylke, masuri, a very famous item, Islamic economics. He's worked for the Islamic bank, World Bank and whatnot. He's, he's written dozens of books, and he is one of his most best selling books is they are a bit toxic. It's a small little booklet, and he goes over all the evidences and the quality of the classical aroma and the modern rhythm. And this is the default position of the merge metaphorically in Makkah. By the way, all of you should know the largest
Council of Scholars alive today. And the most respectable It is called image mild 50, or the end Council of Scholars of 50. in Makkah, it meets every year or two, it consists of scholars from around the globe, and they pass their resolutions by simple majority vote, and it is the closest we get to mainstream film of a modern nature where famous Roma from all different mainstream Sunni schools come together and they debate contemporary issues. Okay, this is called an metromile 50 s also follows the Robert L lm Assamese Oh, I see the famous Oh, I see domitilla m Islami, it is a part of them. So they issued a fatwa many years ago, I think two decades ago, one of their photos in
the 80s when the first photo is that to have a higher price in installments is halal, as long as it is in the contract with the prices, and it is agreed. And technically the late fee is not allowed. If a Muslim writes the contract and sells it to you, there should not be a late fee. If you go to one of these corporations, there is a late fee your Nia must be that you will never ever delay the payment you have to pay the payment on time. And if you do so Charlotte is headed with this. Let me conclude with one point and this is no problem to do this in my humble opinion. You walk into a car store you're interested in a car, they don't have they don't have installment plans they say oh we
have a APR percentage. You go to the managers who look my religion says I cannot have a PR and you people should know this by now Don't be embarrassed tell people we cannot have interest in our contracts this should be known so that people start catering money talks and if they know the clientele will come to them. If they have a hotel contract they will change it. I have done this myself the last car that I purchased I did this myself went into the showroom. I said I don't want an APR, I don't want this I'm going to you go ahead go back to your room. Come back to me with a contract that has a fixed amount price at the end and put it in installments zero APR I said I'm
interested in this car but I'm not going to buy it on APR and guess what I mean money talks in the end of the day they came back they gave me a price lower is negotiated don't just take the first offer write the rule one day you know be a be a good Muslim negotiate your price down I was gonna send ethnicity I said no all ethnicities should do it. It is good to do this they should give you a lower price. So we negotiate down and guess what I got my card hamdulillah zero APR It was a fixed amount that this is how much we're going to do. We don't care how they calculated the fixed amount doesn't matter to us. In the end of the day the contract that is binding is this is the cost of the
car and it is being paid over five years come to the lab okay no problem here's the down payment I'm going to pay every single month and automatic withdrawal from my bank account and 100 I don't have to worry about a late anything is automatically going to that no problem there and this is the photo of the vast majority of Roma frankly I don't know of any council that actually doesn't allow
higher price with with the installments as long as there's no as we said, APR and whatnot so with that inshallah it is permissible to have a higher price with the storm is analyzed which it knows best and
in a feed dounia Salah