Concerned about a contract for car payments

21-5-2006 | IslamWeb

Question:

Assalam Alekum
I bought a car with equal monthly payments for 5 years and the company accepted no interest on the contract though the total was a bit more than usual price. Now I as I wanted to pay whole amount after 2 years, it showed the company is still doing interest calculations by its side ( they asked me for less than what I still owe them),
Is that Haram or I just care about the contract, and should I just keep paying monthly payments as per my contract or can I pay the total and take the difference ( lowering the price as I will pay before the 5 years is done )?

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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 is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.

 

Getting a rebate on the amount of your debt for hastening the repayment of that loan is known among the scholars as: "Rebate the debt and I pay before deadline."

It is reported in the Maaliki Book: "Al-Fawakih Al-Dawani": 'And it is unlawful to make a discount on the loan against paying it before its deadline.'

So, this way of rebating the debt is not permissible according to the majority of the Muslim scholars. But if there is no binding pre-condition regarding the payment of all payments before the end of the deadline, then there is no objection to such a transaction.

Allaah Knows best.