Islamic banks more expensive than conventional banks : Islamic car finance is more expensive than conventional car loan

Fatawa Question

Dear Dr. Kahf, Assalamu Alaykum. I hope you are doing well. I have a question for you, if you don't mind : My friend and I were talking about borrowing money from Islamic banks. He told me that the last time he bought a car in Qatar, he went to the bank and asked them about options they have for car financing. The bank told him they have 2 schemes : a traditional car loan and an Islamic car loan and showed him the numbers for both cases, it turned out that borrowing money using the Islamic scheme would have cost my friend 20,000 Riyals more than the traditional scheme. My friend opted for the traditional car loan and told the bank that spending the additional 20,000 Riyals on his family made more sense to him than giving it to the bank. I totally agree with my friend and both of us are left with the dilemma of what is right in this and similar cases. Why is Islamic borrowing more expensive than traditional borrowing ? Is it because the Islamic banks are greedier ? Or are they realizing that their clientele are doing business with them because of faith and they are taking them for being naive ? My friend and I will really appreciate your thoughts. Thank you very much in advance. Best regards, Meftah

Fatwa

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Publication Date

2012-09-21

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Islam
• Financing
• Loans
• Purchasing
• Automobiles

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-730776

• APA
• MLA
• AMA