My situation requires me to buy a car. It is really mandatory, not for luxury purpose. I really need it because of the cold weather and for transporting my kids to school. I have waited so long to be able to save money and buy a car, but I couldn't because what I earned was spent for paying rent, school fee, food, and helping my old parents back in Asia.

Cars in Europe are damn expensive because of the tax. I searched a lot to find Qarz Hasanna, meaning a loan without Riba interest, but nobody gives me money unless I sign a contract and I make the 100% guaranteed pledge of paying off the loan in the given time, which is 13 months, on a monthly basis according the tolerance of my monthly budget. Unfortunately, there is no Islamic banking available in Europe and I am struggling with this dilemma. Of course I seek help from Allah to help me as he promised from an unimaginable source.

I finally found a Muslim car dealership saying that he will give me loan with one condition. The price of the car if paid all now will be cheaper than if I pay it on the monthly installment as a loan. The difference is big, but he does not call it interest. He says that it is a fee for processing the loan (claiming that it's just like the Islamic banking style); just with different name. Is it permissible to enter to this kind of deal? Would it not be Riba? I have never dealt with an Islamic banking loan before, so I don't have previous knowledge of Islamic banking. Therefore I don't know whether this guy who offered me loan by calling it processing fee is right or wrong. I need your urgent help in shedding light on this problem whether the referred arrangement is riba or not?

This is called Bay' bi At-taqsit.

From what I know, some Oulamas (Ath-Thawri, Al-Awzaï, Al-Albani) say that is not permitted, because they consider it Riba. But there's other Oulamas, like Malek, Abou Hanifa, Ach-Chafiï, that refute this judgement, and have arguments to do so (too long for me to share them here).

But to resume what they're saying, if the price is fixed from the beginning of the transaction, without possibility of increasing it afterwards, at any condition (like an exceeded payment delay), then they don't consider it Riba.

And God knows best.

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