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Repentance for Taking Money from Bonds

Answered by Shaykh Faraz A. Khan

Question: My father has invested in premium bonds since a very long time and every now and then the bonds comes out in the form of money. A cheque from the bond company was sent to me in my name. At this point I knew about the impermissibility of bonds, but I signed the cheque anyway because I though my Dad would get angry if I said the money wasn’t halal. My intention was to stop him from depositing the cheque in to my account by asking him if I could do it and then just destroying it.

However, he went to the bank and has deposited the cheque. I fully intend to get rid of that money as soon as it arrives in to my account, but what I want to know is if I fall in to the condemnation of those who partake in riba- my intention was never to benefit from this dirty money, nor did I ever plan on even depositing the cheque when I got my hands on it (which I never managed to).

I thought I’d be able to destroy the cheque and my Dad would I’ve deposited it and therefore I wouldn’t have to deal with that haram sum of money. That was my intention.

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and states.

InshaAllah you will not be counted amongst those who partake in riba, as your intention was not to accept that money. Having said that, you must immediately get rid of that money, by donating to a charitable endeavor for example.

You need to be upfront with your father and explain to him that bonds are unlawful and you want nothing to do with them. You must also make tawba, which entails sincere remorse, ceasing the activity, resolving never to do it again, and getting rid of the money. [Nawawi, Riyad al-Salihin]

And Allah knows best.

wassalam
Faraz

Checked & Approved by Faraz Rabbani

Is Leasing a Car Permissible?

Answered by Sidi Salman Younas

Question: Is leasing a car allowed? ie you make monthly payments so that in essence you are renting a car.

Answer: In the Name of Allah, Most Gracious, Most Merciful

salamu `alaykum wa rahmatullah

I pray you are well and in the best of health.

Yes, leasing a car is permitted if:

(a) All the rules and conditions required by the shari`ah are met, and

(b) There is nothing stipulated in the lease contract that goes against the shari`ah (such as aspects of riba’).

In the terminology of Islamic Law, leasing is known as ‘Ijarah’ and many of the major scholars of Islamic Finance, such as Mufti Taqi Usmani, have written in detail regarding its rules and conditions. Some of the basic rules and conditions for leasing are:

(1) It is a contract wherein the owner transfers the usufruct of the item being leased to another person for an agreed period and at an agreed consideration,

(2) The leased property remains in the ownership of the seller, and only its usufruct is transferred to the person it is being leased to. (This implies that anything that is consumable – like food or money – cannot be leased)

(3) Since the corpus of the leased property remains in the ownership of the lessor, he is responsible for all the liabilities emerging from the ownership e.g. paying the property tax on a house leased out.

(4) All the liabilities related to the use of the property shall be borne out by the lessee e.g. electricity and water bills in a leased house.

(5) The lessee is liable for misuse and negligence – otherwise he is not as it is considered a trust.

(6) The period of the lease must be determined and stipulated. The amount of rent must also be determined for the whole lease period. The amount can differ for different ‘phases’ if specified clearly, otherwise the contract is considered corrupt. The upshot is to contractually stipulate things in a way that will avoid future dispute.

(7) The lessee can use the item for only the purpose it was stipulated for.

(8) There should be nothing in the contract that entails interest, such as late-payment fees.

Thus, it can be seen that the Islamic understanding of leasing differs somewhat from prevalent, conventional forms of leasing. One should ensure that all his/her actions are in conformity with what the shari`ah has prescribed before proceeding to do anything.

For a detailed introduction to the concept of leasing please refer to Mufti Taqi Usmani’s “Introduction to Islamic Finance”.

Wasalam
Salman Younas

Checked & Approved by Faraz Rabbani

Interest, Parents, & Upholding Good Character

Answered by Ustadh Faraz Khan

Question: I graduated college early because my family does not have alot of money and i didnt want to accrue much debt. I have a student loan which wont accruse interest until six months after graduation. I can pay it off, but my parents want me to contribute more money to other things. In the past they have had extremely poor decision making in terms of finances. I don’t have much faith in the decisions my parents make when it comes to money matters. Theyve squandered alot of wealth, despite our family situation, on things like lavish weddings, cars, and so forth. They keep taking my brothers savings and spend it without care, thousands of dollars. My parents call me “molvi” and claim that I am very disrespectful for a “molvi” because I try to share the perspective of my brother (who is older) and me. If my parents are upset with me, then Allah is displeased. If I start dealing with interest, then Allah is displeased with me.  I have really tried so hard, but I don’t see an easy way out of this   Please advise.

Answer: Assalamu alaikum wa rahmatullah,

I pray this finds you in the best of health and faith. May Allah Most High bless you with ease in this difficult ordeal. Amin.

Avoiding Interest

Our Beloved Messenger (peace and blessings be upon him) taught us a key principle when dealing with circumstances such as yours, as he is reported to have said, “There is no obedience to creation if it entails disobedience to the Creator.” [Tabarani, Mu’jam Kabir; Musannaf Ibn Abi Shayba; Musnad Shihab]

Dealing is interest is unlawful and entails disobedience to Allah Most High; hence, you must take all possible means to avoid it. This is where Allah’s good pleasure lies, inshaAllah.

By the grace of Allah Most High, you have hitherto been able to navigate your way through this situation while avoiding interest; this is very commendable, and your reward is inshaAllah with Allah. You must remain steadfast and not be swayed by decisions that would affect your ability to pay back your loan before interest begins to accrue.

Repaying your loan before that point is your utmost financial priority. Anything else – even if demanded by your parents, and even if it entails a good deed such as maintaining kinship ties, supporting your sister, or the like – is secondary and therefore given no priority over your primary concern. Use this as a gauge to determine whether or not to listen to your parents’ financial requests.

Respecting Your Parents and Upholding Good Character

Notwithstanding your financial priorities, your duty towards your parents should be one of utmost love, respect, kindness and sincere counsel. Obey them in all matters that do not entail contravening the Sacred Law, and be gentle with them.

Our Prophet (peace and blessings be upon him) said, “I was sent to perfect noble character.” [Mustadrak Hakim; Sunan Bayhaqi]

He (peace and blessings be upon him) also said, “Verily Allah is Gentle and loves gentleness in all matters” [Bukhari, Muslim], as well as “Gentleness is not found in something except that it adorns it, and is not removed from something except that it ruins it” [Muslim].

Also, please see the discussion on Patience and Trust in the following answer:

And Allah alone gives success.

wassalam
Faraz A. Khan

Checked & Approved by Faraz Rabbani

“Zero-Percent Financing”: Is It Really Interest Free?

Answered by Shaykh Taha Abdul-Basser

Question: My question is regarding car purchases with 0% financing. Many people argue that there is no such thing as 0% financing when you purchase a car. Even if the dealer says that it is there is always a 0.01% interest.If one is in a situation where their 10 year old car did not pass the safety tes t(obligatory in Ontario to have a license plate), it could be fixed but requires $2000-3000 on a 10 year old car. Now that the temporary sticker has expired and if it gets stopped by police the car will be taken away. Could one qualify to take the financing with 0% financing? Where do you draw the line between the law of the land and avoiding sin like interest?

Answer: Bismillahir-rahmani r-rahim.

Executing deals advertised by auto sales groups or others as “zero percent financing” or “no interest” deals may or may not be permissible, depending on the actual nature of the deal. In reality, such deals often (if not mostly) feature riba since it is typical for the actual documentation (sales agreements, loans agreements, etc) to contain stipulations that are usurious (ribawi) in nature, such as hidden late penalties, interest charges, etc. However, some of the late penalty stipulation are nugatory (mulgha) while others are not. In short it may be permissible to enter some of these deal and not permissible to enter others. The hukm may differ from deal to deal. Before you enter such a deal you should consult a knowledgeable mufti of known achievement in the application of the ahkam of fiqh al-mu`amalat to contemporary finance.

Wa llahu a`lam.

The slave of Allah at Harvard
Taha Abdul-Basser

Pawning an Item & Usury

Answered by Shaykh Taha bin Hasan Abdul-Basser

Question: As-salamu `alaykum. If I were to pawn an item in order to get $200 and then, a month later, go back to buy it back at $225, would that be usury (riba)?

Answer: Wa-`alaykum as-salamu wa-rahmatullah.

There are several likely scenarios:

Scenario One

1) If the first transaction were actually a sale (as opposed to a loan), (as indicated by the contract that you entered into with the pawnbroker) and

2) If, at the time of the first sale, you did not agree (or promise) to repurchase the item at a higher price (but rather, for example, came back later, happened to find that the pawnbroker had not sold the item yet and decided to buy it back from him/her at that time) then the two sales (i.e. both the first and second) are valid (sahih), the transaction would not be usury (riba) and the transaction would be permitted (ja’iz).

Basis (mustanad): Allah says, “wa-ahalla llahu l-bay`a wa-harrama r-riba” i.e. “Allah has permitted buying (and selling) but prohibited usury [riba]”. (Baqara)

Scenario Two

However, if the first transaction were not a sale–but were rather a loan (of, say, $200) that the pawnbroker advanced to you and, as part of the loan transaction, you pledged your item as collateral (e.g. on the basis that if you did not pay the pawnbroker $200 plus interest [i.e. finance charge, service charge, etc] within 30 days, the item would become the  pawnbroker’s)–and then you returned within 30 days and paid a higher amount (e.g. $225= $200 plus finance charges of $25) as repayment of the loan (not as the sales price in an actual repurchase of the item) then this would be usury (riba) and would be impermissible.

Basis (mustanad): It is transmitted from the Prophet (salla llahu `alayhu wa sallam) that he said, “Kullu qard jarra manfa` fa-huwa riba” i.e. “Every loan that draws a benefit is usury.”  Note: The transmission chain (isnad) of this hadith is defective according to several hadith specialists (muhaddithin), but the text has been adopted as a fiqh principle (qa`idah) by our legists (fuqaha’).

Scenario Three

If the first transaction were a loan (of, say, $200) (as in Scenario Two above) but you were to return after the item had already become the pawnbroker’s (e.g. you were unable to repay the loan principal in 30 days but returned to the pawn shop after 40 days had elapsed) and then were to pay a higher amount (e.g. $225) as the actual repurchase price of the item (not in repayment of the loan), then the final repurchase here would not be usury (riba) and would be permitted (ja’iz) provided that 1) you did not agree or promise to repurchase the item at the higher price at the time of the first sale and 2) you did not intend to let the default period expire when you took out the loan.

Note: The first lending transaction itself may be invalid in this case, depending on specifics of the loan contract/pawn agreement. [See “Advice” below].

Advice (nasihah): I strongly counsel you (and any other Muslim, for that matter) against dealing with pawnbrokers (even according to Scenario One) since 1) pawnbrokers are known usurers (i.e. dealers in riba) and 2) the technical differences between the scenarios that I describe above may be difficult for many to discern, because of the duplicity of pawnbrokers, a lack of clarity in the contract or other reasons.

Wa llahu a`lam
The Needy Slave of Allah at Harvard
Taha bin Hasan Abdul-Basser

The Legal Verdict on Prevalent Forms of Insurance

Answered by Mufti Muhammad ibn Adam

Question: The Imam at our mosque said today in his sermon that Insurance is “haram”. His explanation was that you can’t benefit / profit yourself against something that is hidden, i.e. isn’t yet known. Could you please provide some detailed information on this?

Answer: In the name of Allah, Most Compassionate, Most Merciful,

What the Imam in your local Masjid said is correct, in that Insurance is unlawful (haram) according to Shariah.

The reason why all forms of commercial insurances prevalent in modern trade are unlawful and against the principles of Shariah, is that they have either an element of interest (riba) or chancing (qimar), both of which have been explicitly and sternly forbidden by Allah Most High in the Qur’an:

“Those who swallow usury cannot rise up save as he arises whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitted trading and forbade usury. He unto whom an admonition from his Lord cometh, and (he) refrained (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returns (to usury) – Such are rightful owners of the Fire. They will abide therein.

Allah hath blighted usury and made almsgiving fruitful. Allah loveth not the impious and guilty….

And if ye do not, then be warned of war (against you) from Allah and His messenger. And if ye repent, then ye have your principal (without interest). Wrong not, and ye shall not be wronged.” [Qur’an, 2.275-279]

And, regarding chancing and gambling (qimar):

“They question thee about strong drink and chancing. Say: In both is great sin, and (some) utility for men; but the sin of them is greater than their usefulness. And they ask thee what they ought to spend. Say: that which is superfluous. Thus Allah maketh plain to you (His) revelations, that haply ye may reflect.” (Qur’an, 2.219)

And:

“O ye who believe! Strong drink and chancing and idols and divining arrows are only an infamy of Satan’s handiwork. Leave it aside in order that ye may succeed.” [Qur’an, 5.90]

The Ruling Regarding Prevalent Forms of Insurance

Insurance is chancing [= ‘relying on or inviting the risks of chance’ – Merriam-Webster’s Unlimited Dictionary] in the sense that the premiums are paid for certain, whereas the return is uncertain. You may loose all the premiums you paid or may receive in return more then what you paid. This is known as chancing. There is also interest as money is being exchanged here for money and one party pays less and receives more in return.

This is the reason why the great contemporary scholars from all over the world have declared all types of prevalent insurances unlawful (haram), unless when one is compelled to affect it by the Government.

The Islamic Fiqh Academy (Jeddah), and which consists of top recognized scholars from around the globe researched the issue in considerable depth. The meeting was attended by no less than 150 such scholars from 45 Islamic Countries, including my respected teacher Shaykh Mufti Muhammad Taqi Usmani (may Allah preserve him), and they unanimously declared all types of prevalent insurances to be unlawful.

How About Car Insurance?

However, it should be remarked here, that since third party car insurance is a mandatory legal requirement for every car-owner, one can affect this kind of insurance, as it is not possible for one to avoid it.

Is There An Alternative?

Islamic financial institutions offer a viable and Islamically-accepted alternative, which is takaful, a form of cooperative insurance. Details of this are available through such institutions.

And Allah Knows Best
Muhammad ibn Adam
Darul Iftaa
Leicester , UK