Wa `alaykum As-Salamu wa Rahmatullahi wa Barakatuh.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
There is nothing wrong with leasing cars as long as there is no violations of the requirements of the lease contract.
In his response to your question, Prof. Dr. Monzer Kahf, a prominent economist and counselor states:
Leasing in general is permitted in the Shari`ah. Many car leasing companies in North America do not violate the requirements of the Shari`ah: including the part of the lease contract from where the lessor obtains his financing from, the basis on which it obtains financing, and the terms of reference (including the interest rate) used in calculating rent.
The most important matter in a lease contract is that the car remains under the ownership of the lessor and it carries all implications. These implications include liability should a disaster befall that may destroy the item of the contract, and major maintenance without which the car cannot function.
Unfortunately, major maintenance is normally covered by the warranty from the manufacturer and disasters can also be covered by insurance.
There is a need to clarify the matter of insurance because while it may be considered the responsibility of the lessor, car insurance is heavily affected by the driver and her/his driving style.
In either case, insurance premiums can be thrown, according to the Shari`ah, on the lessee as a part of the rental payment so that the rent will be as follows: you pay me a given amount every month + give me the service of insurance protection that is well-defined and specified.
Almighty Allah knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.