Answered by Shaykh Yusuf Badat
Question:
What is the correct Islamic compliant method to lease a car? What changes need to be made to the contract? Has anyone done it successfully?
Answer:
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the name of Allāh, Most Gracious, Most Merciful.
Jazāk Allāh Khayr/ Thank you for contacting Mathabah Institute.
Leasing a vehicle is considered ijārah (rental transaction) as per Islamic law.
When leasing a vehicle, the contract usually stipulates that the actual ownership of the vehicle remains with the leasing company. A client is only registered as an operator of that vehicle and not as the owner. As such, any payment made to the leasing company is viewed as rent and not as a payment to acquire ownership. The owner of a commodity can charge any mutually agreed-upon rate when renting that commodity. This rate can include an interest component as most leasing contracts do. In this type of arrangement, a leasing company purchases the vehicle from a car dealership and in turn rents it out to a customer for a specific period of time at a specified price. Other conditions may be included in this agreement such as a maximum mileage condition. Since this type of transaction is based on lease where the vehicle operator merely rents it; it will be permissible for one to lease. – (See: Rad Al-Muḥtār, Vol 6, Page 8, Dār Al-Fikr)
The general stipulations for ijārah (rental transaction) to be valid in Islam are:
- Consent by both parties leasing/ renting
- Rental amount to be paid, clearly stipulated
- The service (manfa’ah) clearly stipulated
- The duration of the lease/ rental, specified
If you can have your contract correlate with all the Islamic requirements, you may islamicaly go ahead with the lease. Yes, I am aware of several practicing Muslims who lease vehicles as per Islamic guidelines.
Only Allāh knows best
رُكْنَهَا الْإِيجَابُ وَالْقَبُولُ وَشَرْطُهَا كَوْنُ الْأُجْرَةِ وَالْمَنْفَعَةِ مَعْلُومَتَيْنِ لِأَنَّ جَهَالَتَهُمَا تُفْضِي إلَى الْمُنَازَعَةِ وَحُكْمُهَا وُقُوعُ الْمِلْكِ فِي الْبَدَلَيْنِ سَاعَةً فَسَاعَةً – كتاب حاشية ابن عابدين رد المحتار ج٦/ ص٨ دار الفكر
