I want to buy a car for 40,000 pounds. I will pay 20,000 in advance and the rest, based on the company's conditions, will be deposited in the bank and the remaining installments will be paid from the revenues. Is this transaction considered Riba? Thank you.

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.

This transaction involves several Sharee‘ah violations which make it prohibited. The first and most important violation is combining sale and a price-affecting condition. That is because the rest of the price, which will be paid from the revenues of the deposit, is based on ignorance. Profit may or may not be achieved. If there is profit, it may be little or much. Such a state of uncertainty necessitates ignorance about the exact date of payment. Specifying an exact date for payment is a prerequisite for such a transaction to be valid. In a Hadeeth, the Prophet, sallallaahu ‘alayhi wa sallam, said: “He who makes an advance payment in dates should not make an advance payment except for a specified measure and weight (and for a specified period).” [Al-Bukhari and Muslim. This is the wording of Muslim]

Some scholars, however, are of the view that joining sale and partnership or Mudhaarabah is not allowed. In the transaction in question, the sum of 20,000, which is supposed to be paid to the company, is either a partnership or Mudhaarabah. Therefore, this transaction is impermissible.

Note that it is impermissible to deal with this bank in the first place if it is Riba-based through any transaction, for this represents approval, satisfaction and cooperation on what is prohibited. Allaah The Exalted Says (what means): {And cooperate in righteousness and piety, but do not cooperate in sin and aggression.} [Quran 5: 2]

Allaah Knows best.