Car loans by Algerian bank

20-11-2002 | IslamWeb

Question:

Are the loans on cars purchase bestowed by the bank "Baraka Algeria" is compliant with Islamic Sharia?

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Answer:

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

 

We do not know how Al-Barakah Bank manages its financial transactions. So, we cannot give you an Islamic ruling in this concern. It is better to address such the question to the scholars in Algeria who, we think, should know the nature of this bank.

As for the loans, we state that if this bank is an Islamic bank (i.e. does not deal in Riba ‘interest and/or usury’) and gives good loans (free of Riba) to its clients, then it is permissible to get these loans. But, if it takes any interest for lending/giving these loans, it becomes forbidden to take them.

Also, if this bank purchases a car, and then sells it to its client to be settled by installments, this is lawful, since this is Muraabahah transaction (resale with a stated profit).

For more details, please check our Fatwa 83608.

Allah Knows best.