Islamic banking: profiting or interest?

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XtremeL

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Salam,
My friend is selling her car and i want to buy it but since her car is like a year old (new car) she is selling it for a good amount of cash. Since i do not have that much money on me, they told be that i can buy it through the bank (islamic bank). Like she would be selling the car to the bank for a certain amount of money which at that point the car would become the property of the bank. Meaning i would be buying the car from the bank but for more than what my friend offered in installments. The bank calls it profiting but i still kinda feel like its interest (riba). Most shaikhs say it is ok but im still not Comfy with their decision. Can i get every ones opinion regarding this issue.
Thanks:)
 
The difference has to do with risk allocation, the bank's decision to buy the car first and then sell it to you is OK even at a higher price but if the bank were to sell the car to you before buying it will not be OK.

The mode of payments in installments is a separate issue and is perfectly acceptable as long as the late payment fees and penalties are all worked out in the contract.
 
The bank deciding that the car is worth more than your friend thinks doesn't make it riba, just means they want to get more out of it. If they jacked up the price a lot that could be gouging, and if they said, "Well you can make payments of 200 a month plus 5% interest", well that would be riba. But the bank has to make some sort of profit from the purchase of the car, or else how could the bank stay open? As long as they aren't charging interest on the car,or asking for an insane amount, its okay.
 
The bank bought the car.
The bank is selling it for a profit. Just like a shopkeeper.
The bank is not forcing u 2 buy it.
It is legal.
 
Wa alaikum salam.Your transaction of your friend selling and your buying throgh a syaria bank is called as murabhahah. The bank buy it from your friend and then the bank sell it to you with a different price
The difference is the profit of the bank because the bank bears a collectibility risk of your installments. It is not an interest which is not allowed in syaria bank because it is a riba.If you agreed the offer of the bank,that transaction is valid as murabhahah..It is funny that a bank involves in the trading of goods but it is a halal transaction.
In substance I agree with you that you feel like interest but really it is not an interest.Syaria bank should avoid interest as haram terminology
 
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