Car lease on hire purchase : interest penalty in car leasing

Fatawa Question

Salam Alaykum Brother Monzer, Last year I leased a car from VW and before I leased it I asked a local brother who has some knowledge and he said as long as the lease contract does not contain any interest it should be fine. I looked up the lease and I did not find anything talking about paying interest including the section that talks about the default payment, it only mentioned a $15.00 penalty for late payment, so I signed the lease. This year I want to lease a Nissan car for my wife and two kids but when I looked under the lease terms I found that Nissan charges 6 % interest per annum for default payment so I stopped the process and hoping I can find an answer from you on this issue. Also I should mention that when they checked my credit score they gave me a higher monthly payment because I don't use credit cards nor have mortgage or loans and my credit score is low. The finance person told me that he calculates something called money factor to figure out the monthly payment and as he described it he said it is a form of interest. Is that ok ? Jazaka Allahu Khair and may Allah bless you for helping us reaching the right path. Jamal

Fatwa

Click hereto view more

Publication Date

2011-09-16

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Banks
• Islamic jurisprudence
• Islam
• Contracts
• ٌLeasing
• Ruling in Islam
• Punishment
• Automobiles
• Usury

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-732519

• APA
• MLA
• AMA