Buying a car from islamic bank which states clearly that they will take 4.25% interest rate over 5 years ....is it halal or haram to take car through such bank. On such car under installments of bank , can i go to umrah or hajj ?

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.

If the Islamic bank sells you the car with a known price and gets this price in installments, then this transaction is permissible even if it sells you the car at a higher price because making profit is lawful and time has a share in the price, and there is no harm in calling the profit as interest and dividing it according to the duration of the debt.

A person who buys a car and pays its price over one year is not like a person who buys it and pays its price over five years, so the price will not be the same and this is known according to the trade customs and the basic laws of selling whether the seller is a bank, a person or a company.

What is important is that the price of the car should be determined at the time of conducting the contract and the bank should not condition a fine if there is a delay in the repayment of an installment and the like. Also, there must be a real sale between the bank and the customer. For more benefit, please refer to Fataawa 38725, 85259 and 90516.

Allaah Knows best.