Sharia-compliant car financing

[umerinayat]

There is also penality to be "ISLAMIC" by charging more......

[hsnmz]

Salam

Please don't expect that if you are using Islamic banking then Angels will come down from heavens and deliver you car to you. Islamic banks are here to earn aswell. The only difference that you get , and I consider this the most impotant thing, is a Halal deal insted of haram. A riba free deal.

[autophile]

@hsnmz. dear element of riba remains very much there in the so-called Islamic banking, only the nomenclature is Islamic, rest is the same. What a state of denial.

Where Islam has allowed us to go beyond our means by borrowing things? Even taking of Udhar (Qarz) for luxuaries is haram, so where does Islamic banking stands?

[bilalahm]

@autophile.............. hi sir how r u.......... I would like to discuss all this with you sometime as i really want the viewpoint of some influential journalist to go towards islamic modes of financing .......... and I hope we would agree to some points but I won't like to do it here...

@hsnmz ............ agree with you 100 percent.......

[hsnmz]

Salam

Sir jee, first of all its not a Qarz, its a lease and you are paying monthly rentals. the car is in banks name i.e. bank is the owner of the car, where as in car loans that commercial banks offer the car is in your name and the agreement between you and the bank is a loan agreement against which you pay to the bank extra money which is riba. This car lease is just like you lease a house on rent. You pay security in the begining and at the end of lease agreement you evacuate the house and your security deposit is returned to you after adjustment of any damage or discrepency. Similar is this car lease, its only that the lessor which in this case is a bank decides a value of its asset (car) at the start of the lease period which depreciates over time and at the end of the lease you can return the car back to lessor and get your initial deposit back after adjustment of any damage or discrepency or you can pay its price and buy the car from the lessor.

This difference is jusk as if there are two couples living in two rooms side by side. one of the couples got their nikaah done whereas the other is living without nikaah. now apparently there is no difference between the two. they live same kind of life but if we look at them through the eye of shariah one is living a haram life where as the other couple is living a halal life. The difference is only of one piece of paper called nikaah nama.

I hope this clears your mind a bit.

[hsnmz]

And thats why I said earlier that please don't expect angels to drop from sky. Islamic banking would apparently look similar to the commercial banking but actually one is halal and the other is haram.

[autophile]

@hsnmz. Brother thanks for your explanation. I respect your views. But I am not convinced. Best regards

PS: My car through UBL drive is also under some Islamic mode of financing (but the exploitation of element of riba is still there, though an Islamic label has been given to it)

[hsnmz]

Please consult from darul-Uloom Karachi about this. they monitor the activity of the Islamic banking and will guide you better about it. I consider them an authority here since they have great ulamas i.e. Justice retired Taqi usmani and others i don't remember their names. Since we don't have enough knowledge about shariah therfore, consult them as they are the right people to ask from.

[TM]

I have not read all the replies in detail. But would like to say that this just another way of selling their products.

The Banks are clever they think by putting a word “Islamic” will attract a lot more people, some of whom stayed away, because of “Haram & Halal” issue.

But we all should know, they are here to earn money. Nobody, want to lose a single rupee.

[Seyedowais]

There is no doubt about it that the bank is also there in the market to make money not just to offer free services, but i am closely in touch with all these people and i exactly know their intentions and the way the product is being made and the way Shariah objected to different models. For anyone who wants to clarify anything please feel free to ask i will forward his number to the relevant people just to clear his things out.

[anonpak]

Autophile, I agree entirely. When we're told something is Halal, we must ask a few questions ourselves. Islam is not about following orders and obeying deceptive advertising campaigns - it's about self discovery. Grab a Quran and read yourself what's said about Interest.

There are two reasons we are prohibited from interest. The first is to buy what is within our means. The other is because interest exploits the poor.

I dont know about Pakistan specifically, but in Canada one Muslim gentleman is charging a 7% "fee" for a Halal Financing. All other banks are charging 3% interest. Ironically these "halal" loans cost a poor person MORE than "haraam" loans. Now tell me which is haraam and which is not? The Islamic bank or the normal bank? Extorting 7% or 3%?

These Islamic banks could care less. The illiterates will go to the Islamic bank thinking what they're doing is Halal. They dont know better. In reality our poor people have no idea how badly they are being cheated in the name of religion.

[shueyb]

@ anonpak:

You said "the illiterates will go to the Islamic bank thinking what they're doing is Halal".

So you've termed all those sholars as illiterate who have devised the rules of Islamic banking, the sholars sitting in the State Bank of Pakistan, the judges of Federal Shariat Court who had announced that landmark judgement in 1999 for elimination of riba.

Who told you that among the two options, the cheaper one (3%) would be halal and the other option being more expensive would be haram! When you don't know about something, it's better not to pass judgements about it, but to ask someone who knows.

'hsnmz' has explained the difference between Islamic and conventional financing. Also, I've heard that halal meat available in western countries is more expensive than the other meat.

[bilalahm]

There is a verse in the quran whose translation is like " and they say that trade is also like riba, whereas Allah has made trade Halal for you and Riba haram".....
I would try to locate the exact translation if I can..........

[punchi]

Asalam-u-alikum

As far my knowledge All Islamic and Other banks, All require Insurance, And Ullma already taken Insurance matter as haram,

Now if Islamic Bank says Insurance is Hilal, then it means Life insurance is also Hilal,

This is the main question, Further there are many other matter which all islamic bankers are doing wrong, For example it is in Islam that if any body owing loan do not pay back in time there is no charges, But if any customer late the installment they charge penality which is entirely against Islam.

So in the last i think that both modes are not correct, But i think in case of Islmaic banking if you take Car it's all responsibility of them.

It is only my thinking , your thinking can be different than me

[anonpak]

shuyeb, what i meant was illiterates in the literal sense - the poor people who cannot read the quran. i hope you know who i'm talking about. the people that are exploited every day.

also, when we say something is haram, there is a SPECIFIC reason for it. you cant say halal meat is similar to halal insurance. some meat is haram for hygienic reasons. interest is haram for social reasons, we arent allowed to buy beyond our means. we aren't supposed to exploit the poor. we arent allowed to penalize someone for not paying money on time. islamic banking does all that!

when an islamic bank is charging 7% "fees" and a normal bank is charging 3% "interest" we are not helping our poor brothers and sisters. we are just making their debt even larger.

sometimes people need to use common sense. just because they give you a loan on a halal piece of paper doesnt mean it's halal. think about WHY interest is haram and you'll see how these banks are exploiting the religiously conscious people who unfortunately cannot read the quran (poor illiterates).

[shueyb]

anonpak, I'm sorry to have misunderstood what you meant by 'illiterate people'. Your view is different here than mine. There is a difference between what's permissible and what's desirable. In the previous times, we used to interest rates of up to 100% or more, which amounted to exploitation. In my view, today's interest rates and banking structure doesn't amount to exploitation of the poor even with interest rates of up to 15%, still the question of what's haram and what's halal exists. And I trust the State Bank's Islamic Banking Department's guidelines and commercial bank's Shariah advisors in this regard. However, the question punchi has raised about Islamic banks' car insurance needs to investigated.

[imstallion]

If you were given two CHICKEN TIKKAs and asked to tell by tasting it which is HARAM and which one is HALAL then you can not just tell by tasting it. You have to see the precedure thorogh which the chicken gone through so that you can declare it is HALAL or HARAM.

Same is the case with ISLAMIC BANKING. It may look same and the result may be the same but my dear friends its the PROCEDURE ........... which defines its HALAL or HARAM.

ISLAMIC BANKING or (riba free banking) products look similar to conventional Banking products/leasiing companies ............. but they are definitely different.

And finally Islamic Banks are here to do business ... not for CHARITY .... these things should be kept in mind

[imstallion]

If you were given two CHICKEN TIKKAs and asked to tell by tasting it which is HARAM and which one is HALAL then you can not just tell by tasting it. You have to see the precedure thorogh which the chicken gone through so that you can declare it is HALAL or HARAM.

Same is the case with ISLAMIC BANKING. It may look same and the result may be the same but my dear friends its the PROCEDURE ........... which defines its HALAL or HARAM.

ISLAMIC BANKING or (riba free banking) products look similar to conventional Banking products/leasiing companies ............. but they are definitely different.

And finally Islamic Banks are here to do business ... not for CHARITY .... these things should be kept in mind .

Similarly INSURANCE itself is not HARAM. Again its the procedure..... and its also divided into Sharia compliant & non-compliant. The remedy is there in shape of TAKAFUL

[bilalahm]

good discussion guyz........... and one more thing..... we should not mind if someone has a different point of view and listen to all the things people have to say with an open heart............ and no ghussa

[punchi]

Asalam-u-alikum

In islamic banking, then why insurance is compulsory, I know since 7 or 8 years many islamic banks are giving Car, and Takful is just started , Before they use to have Insurance.,

If car insurance is HILAL, or you can say before insurance and now Takaful ,
If the same procedure i think LIfe Insurance is also HILAL???

I am not saying that i am against Islamic Financing, But i want that if there would some procedure that could be perfect..