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Working in Car Dealership That Offers Financing

Ustadh Salman Younas answers a question on the permissibility of working for a car dealership that at times offers financing for purchases.

Question:

Assalam alaykum wa rahmat Allah wa barakatuh.

I had a question regarding working in a car dealership. I would be selling cars and earn base salary plus commission. The people buying the cars may pay all cash, or may finance and sometimes it is zero percent interest. But sometimes they have to pay interest, even though I believe it is not as often as zero percent financing. Please let me know insha Allah.

Answer:

Wa alaykum assalam wa rahmat Allah wa barakatuh.

Generally, the job of selling cars as an agent would be permitted. Thus, the money you earn from your work in a car dealership would be licit specifically when the majority of income the company is earning is through permissible means.

The major issue with your working in a car dealership is the assistance you may have to provide for obtaining an interest-based loan. This would include overseeing the signing of the contract, filling it out, signing it, and so forth.

As Mufti Taqi Usmani states, this would not be permitted and would fall under the hadith where the Prophet, blessings upon him, strongly rebukes not only the receiver and giver of interest, but also the one “who has written the interest.”

As such, this element of your job must be avoided. You may, for example, ask someone else to do such paperwork. If you cannot avoid it, you should try and seek work that will not have you engaged in such interest-based dealings. This does not have to be done immediately.

You can continue working in your current job until you find a reasonable alternative. But you should seek God’s forgiveness and hate the interest-based nature of the work in your heart.

Salman

Checked and approved by Shaykh 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