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Fatwa CenterPurchasing car on Installment
Question
1. What is the Shariah ruling on purchasing items (such as car) by installment? Can this type of transaction be considered as usury (Riba)?2. What conditions should a Muslim meet before taking a loan?
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
1 - Purchasing goods via installments is permissible in a way that the remaining price or installments are considered a debt which the purchaser is obliged to repay. For instance, a seller informs a buyer that the price of a car is such and such on installments and that the amount of monthly installments is such and such an amount. This contract is permissible as it is confirmed that Bareerah 
purchased herself [freed herself from slavery, as she was a slave] with nine Awqiya [a unit of currency] – over nine years, and the Prophet, sallallaahu ‘alayhi wa sallam , did not object to this.
2 - The conditions which a Muslim should observe before borrowing are as follows:
(a) He should be in a dire necessity for borrowing and he should not take debt as an easy matter because it is a source of anxiety and humiliation.
(b) He should intend to return this debt so that Allaah would help him to do so. The Prophet, sallallaahu ‘alayhi wa sallam, said: “Whoever takes people's money while wanting to repay it, Allaah will help him to repay it, and whoever takes people's money while wanting to ruin them, then Allaah will ruin him (i.e. ruin his wealth and punish him in the Hereafter).” [Al-Bukhari]
It is desirable to write the details of the debt in the presence of some witnesses so that rights will be preserved; Allaah Says (what means): {O you who believe, when you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you.}[Quran 2:282]
Finally, we ask Allaah to enable you to do that which is good and guide us all to perform good deeds.
Allaah Knows best.
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