Leasing Cars: Permissible?
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Leasing Cars: Permissible?



Reply Date

Dec 09, 2018


Dear scholars, As-Salamu `alaykum. Obtaining a car via a leasing company: If someone wants to obtain bank credit to buy a car or whatever, is he obliged to ask for this from a usurious bank, unfortunately not from Islamic Banks. The alternative of this is to obtain a car from a leasing company by paying regular rents each month with the option to buy at the end of the contract. The leasing company also applies the interest rate (usury rate) when calculating the rental charge. During the leasing period, the car remains the property of the leasing company. In the Islamic point of view, is this halal or haram? Jazakum Allah khayran.



Leasing Cars from Islamic Perspective

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.

About Prof. Dr. Monzer Kahf

Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey

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