Buying a Car from the Bank on Installments

What do the esteemed scholars and respected Muftis say regarding the following matter: In Abu Dhabi, the procedure for purchasing a car from an Islamic bank on installments is as follows — during the contract session, the total price of the car, the number of installments, and the amount of each installment are all determined and agreed upon. If a payment is delayed once or twice, the bank takes no action. However, if the payment is delayed a third time, the bank repossesses the car. After repossession, the bank demands payment for the remaining installments; otherwise, it returns all previously paid installments in full and takes back the car. Sometimes, the bank charges rent for the duration the car was used, and sometimes it does not. The question is: Is such a transaction permissible according to Shariah priciples?

الجوابُ حامِدا ًو مُصلیِّا ً

In the mentioned case, purchasing a car from the bank on an installment basis in the described manner is Islamically valid and permissible. However, in the case of iqalah (cancellation of the sale and returning the car), the bank’s procedure should be thoroughly investigated, written down, and sent again to the Darul Ifta. Insha’Allah, that aspect will also be reviewed.

مأخَذُ الفَتوی

كما في الدر المختار: (وصح بثمن حال) وهو الأصل (ومؤجل إلى معلوم) لئلا يفضي إلى النزاع ولو باع مؤجلا صرف لشهر به يفتى اھ (4/ 531)
وفي المبسوط للسرخسي: وإذا عقد العقد على أنه إلى أجل كذا بكذا وبالنقد بكذا أو قال إلى شهر بكذا أو إلى شهرين بكذا (إلی قوله) وهذا إذا افترقا على هذا فإن كان يتراضيان بينهما ولم يتفرقا حتى قاطعه على ثمن معلوم، وأتما العقد عليه فهو جائز؛ لأنهما ما افترقا إلا بعد تمام شرط صحة العقد اھ (13/ 8)
وفی الهداية شرح البداية؛ أنه يزاد في الثمن لأجل الأجل اھ (3/ 58)۔