Q: I would like to purchase a car through a bank. Kindly provide me information of which bank is Islamically approved. If you could kindly propose conditions for the finance to be Islamically accepted which I can in turn put forward to the bank.
A. There is no Islamically approved bank. All banks, be they Muslim-owned, are capitalist riba institutions.
Some non-Muslim-owned banks have a scheme by which the instalments are fixed and are inclusive of all the bank’s charges. If the bank agrees to sell the vehicle in terms of a fixed instalment basis, then the deal will be permissible. The purchase price will be fixed and known at the time of the transaction, e.g. 60 monthly instalments of R1 000. Thus the purchase price will be R60 000. The other method is to lease the vehicle. The monthly rental should also be fixed and all-inclusive. At the end of the lease term, the banks usually sell the vehicle to the lessee for a nominal amount, e.g. one instalment amount or even less since they have already obtained the full value of the vehicle.