Question:
My friend has redacted some information about the customer, vehicle and dealership details due to privacy reasons.

Just a little more context what the finance manager told me…
– The bill of sale will have 0% finance rate from the bank. I don’t pay anything extra to the bank apart from the bi-weekly amount of $277.79 for 130payments which comes upto the amount financed $36,112.71 as per Bill of Sale.
– I will need to make one payment to the dealership for approximately $7,500 for which they will give me a invoice separately under the dealership’s name. This invoice is for fees to be paid for halal financing deal, licensing, Ontario plate registration etc.
– The finance manager mentioned something about “Buying down” the interest of the bank loan which will be undertaken by the dealership and therefore the separate one time payment is required to be made to the Dealership as a Halal Financing Deal Fees.

Please note that this payment of $7,500 is not made to the bank by myself. I believe the dealership is taking extra money from me and applying it to the bank loan in the background. But ALL the payment terms on the bill of sale are on 0% rate and there is nothing else required from me to be paid for.

Also, I have not yet signed the bank loan agreement and therefore the finance manager has not provided a copy of it. I have been rest assured that the bank loan agreement terms for 0% interest rate will match the Bill of sale.

Documents Provided :

1. Bill of Sale with full details
2. Bank Loan Agreement

Answer:

In the Name of Allāh, the Most Gracious, the Most Merciful.

As-salāmu ʿalaykum wa-raḥmatullāhi wa-barakātuh.

We have reviewed the sale contract along with the bank loan contract. Though both contracts state that the cost of borrowing/interest rate is 0%, there is no documentation of the $7,500 mentioned in the question. You mentioned that the $7,500 “is for fees to be paid for halal financing deal, licensing, Ontario plate registration etc.” The cost of licensing and registering a car in Ontario is only a few hundred dollars.[1] The $7,500 far exceeds this amount and, based on our assessment of the documents and information provided, constitutes ribā (interest).[2] There is no item of exchange corresponding to this sum. Rather, it appears to be a payment to the finance company for financing the car.

A simple solution is to add the $7,500 to the sale price of the car, add this to the documentation, and stipulate a down payment to be paid to the car dealership. This amount can be more, less, or equal to $7,500. Thereafter, whatever the dealership chooses to do with this sum will not be attributed to the buyer.

And Allāh Taʿālā Knows Best

Muftī Mohammed Wahaajuddin
Farmington Hills, Michigan, USA

Checked and Approved by:

Muftī Faisal bin Abdul Hamīd al-Mahmūdī
Darul Iftaa Canada (www.fatwa.ca)
—
[1] https://loanscanada.ca/auto/tax-on-cars-in-ontario/#:~:text=including%20the%20following%3A-,Registration%20Fees,permit%20and%20a%20license%20plate.

“After you buy a car, you must register it with the Ontario Ministry of Transportation (MTO). Registration fees are based on the vehicle’s weight and can vary anywhere from $120 to $240. Plus, you’ll have to pay $32 for a vehicle permit, or $59 for the permit and a license plate.”

[2]

رد المحتار، كتاب البيوع، باب الربا، ج٥ ص١٦٨-١٦٩، سعيد
في الدر المختار: الربا هو لغة: مطلق الزيادة وشرعا (فضل) ولو حكما فدخل ربا النسيئة والبيوع الفاسدة فكلها من الربا فيجب رد عين الربا لو قائما لا رد ضمانه لأنه يملك بالقبض قنية وبحر (خال عن عوض).

الفتاوى الهندية، كتاب البيوع، الباب التاسع فيما يجوز بيعه وما لا يجوز وفيه عشرة فصول  الفصل السادس في تفسير الربا وأحكامه، ج٣ ص١١٧، مطبعة الكبرى
وهو في الشرع عبارة عن فضل مال لا يقابله عوض في معاوضة مال بمال وهو محرم في كل مكيل وموزون بيع مع جنسه