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?