Question
I would like to enquire with regard to a car dealer accommodating the normal finance packages.
The interest which is paid to the dealership from the bank as a kick back is given away without the intention of a reward.
What if the dealership only allows the bank to charge the buyer a 7 percent interest rate which results in the bank not giving the dealership any kick back.
Will accommodating these types of packages be permissible?
Answer
With regard to a dealer arranging finance for his clients; although he disposes of the interest received from the bank for accommodating the deal, he will still be considered to be assisting in the disobedience of Allah Ta’aala.
Amongst the people cursed by Rasulullah Sallallahu Alayhi Wa Sallam for being involved in interest bearing transactions is one that writes the transaction and the one that witnesses the transaction. By the car dealer arranging the Haraam finance from the banking institute, he will be documenting and perhaps even witnessing the transaction. It is therefore not permissible for the motor car dealer to arrange finance on behalf of his customers through the commercial banks irrespective of whether the car dealer receives some form of kick back from the bank or not.
Yes, if the client himself (without any involvement or assistance from the dealer) gets a loan from the bank which he uses to purchase a vehicle from the dealer, then it will be permissible for the dealer to sell him the vehicle, even though the dealer knows that the funds have been procured through the bank. This is due to the fact that in this case, there is no involvement whatsoever from the dealer other than perhaps giving the client a quotation with regard to the selling price of the vehicle. Further than that, the loan and finance agreement is between the client and his bank.
Checked and Approved By:
Mufti Muhammed Saeed Motara Saheb D.B.