Another Fatwa on selling by Installment Payments

Question :

I went to one of the companies that sell cars by installment payments and I bought a car from them. They told me that for cash up front the cost of the car was 50,500 riyals and over payments it would be 54,131 riyals at an increase of 14% on the rest of the sum (that I still owed). I paid them 10,000 riyals and what remained was 44,131 that was divided into monthly installments over 12 months. I received the car and after 4 months passed I happened to think about the increased sum of money and I went to ask them what was the 14%. They told me that it was for bank expenses. Then, I began to have doubt. Was that deal which was made forbidden or lawful?

Answer:

If the buyer agrees to a delayed payment with the car company in that the amount would be 54,131 riyals, and all of it would be the price of the car that he pays in installments or he pays some of it up front and some of it later, then that sale is lawful Islamically. It makes no difference if the delayed payment was more than what the cash payment would be up front.

Source:
The Permanent Committee
Fatawa Islamiyah, Vol. 4 Page 368

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