Question

Is the following information sufficient to show that there are two separate agreements? (Hire & Purchase) – See Picture attached in ‘Appendix’ below.
‘The hire purchase agreement – The agreement you are thinking of making is a hire purchase agreement. This means Black Horse Ltd will own the vehicle and hire it to you. You will only become the owner when you have paid all the amounts due to Black Horse Ltd under the agreement. This includes any purchase fee. If you wish to own the vehicle from the outset, this product is not suitable for you’

Answer

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

Firstly, a hire purchase agreement (HP) consists of hiring a car and paying regular instalments, with the vital component of ownership only being transferred when the last instalment is paid.

The information you have provided (via the picture) is simply confirming the reality of this transaction, which is as outlined above. The company has clearly indicated that you don’t take ownership of the car at all, until the last payment. Thus, it can be assumed that the transaction is initially a hire (Ijārah) agreement. However, upon transferring the last instalment of this ‘hire agreement’, all the money paid is assumed to be part of a purchase transaction for the car.

Therefore, after researching this specific scheme/service from the provider thoroughly, we identified some fundamental issues that are problematic from a Shari’ah perspective, they are as follows:

1) As outlined above, there are evidently two transactions running parallel to each other. One is a hire and the other is a purchase. Both contracts are dependent on each other and are not separable and thus, they are dependant on each other. Rasullullah ﷺ prohibited from two transactions within one transaction. [1]
2) If for instance, we assume that the entire transaction is one of purchase, then the seller/provider (Black Horse Ltd) still holds legal title of the vehicle until maturity (last instalment). This is not Shariah Compliant as the purchaser (buyer of car) should be the sole and complete legal owner of the vehicle with all its rights and benefits. Once again, that’s if we assume this to be a purchase agreement. We’re not satisfied that is either a purchase agreement or a hire/lease agreement as this scheme has elements from both types of agreement, as outlined above. [2]
3) There is an indication (see documentation via link below) that there may be monetary penalties for late payments on instalments. This is a common issue of such conventional schemes, as this renders the scheme not Shariah-Compliant. [3]

This has been clearly forbidden from the perspective of Shari’ah and there are various fundamental issues that arise from such transactions.

In conclusion, generally such Hire Purchase (HP) agreements involve some sort of double-deal (two transactions combined) and/or interest, alongside the added issue of penalties for default payments (missing payments etc).

والعلم عند الله 

And Allah knows best

DeenSpire / 1 Dhul Hijjah 1441/ 22 July 2020

Approved by: Mufti Muhammad Tahir Wadee (UK), Mufti Yusuf ilolvi (India)

Note: All relevant references can be found below.


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[References]

[1]
قال الله تعالى: وأحل الله البيع وحرم الربا
وأخرج الترمذي (١٢٣١) والنسائي (٤٦٣٢) وأحمد في مسنده (٩٥٨٤) عن أبي هريرة قال: نهى رسول الله
صلى الله عليه وسلم عن بيعتين في بيعة. اه
وقال محمد في الأصل (٢/٤٤٠، طبعة قطر): وإذا اشترى الرجل من الرجل بيعا على أن يقرضه قرضا أو يهب له هبة أو على أن يعطيه عطية أو على أن يتصدق عليه بصدقة أو على أن يبيعه كذا وكذا بكذا وكذا من الثمن، فهذا كله فاسد. وقال السرخسي (١٣/١٦): لنهي النبي صلى الله عليه وسلم عن بيع وسلف وعن بيعتين في بيعة، انتهى

[2]
وقال المرغيناني في الهداية (٣/٢٣٠): ولا تصح حتى تكون المنافع معلومة، والأجرة معلومة لما روينا، ولأن الجهالة في المعقود عليه وبدله تفضي إلى المنازعة كجهالة الثمن والمثمن في البيع. انتهى.
وقال في الملتقى الأبحر (ص٥٢٠): هي بيع منفعة معلومة بعوض معلوم دين أو عين، وما صلح ثمنا صلح /أجرة وتفسد، انتهى
وقال الشيخ محمد تقي العثماني في فقه البيوع (٢/١١٥٥): البيع الإيجاري – حقيقته أن مالك العين يؤجرها إلى آخر بشرط أن المستأجر إذا وفى بجميع أقساط الأجرة في مدة معلومة فإنه يستحق تملكها دون دفع أي ثمن يعتد به، وهو غير جائز شرعا، لكون العقد متردد بين البيع والإجارة، انتهى
Hire Purchase – البيع الإيجاري

[3]
قال الزيلعي في التبيين (٤/٧٨): لأن الأجل ليس بمال متقوم فلا يقابله شيء ما الثمن. انتهى
وقال السرخسي في المبسوط (٢١/١٣): فإن مبادلة الأجل بالمال ربا (ألا ترى) أن الشرع حرم رب النساء، وليس ذلك إلا شبهة مبادلة المال بالأجل فحقيقة ذلك يكون رباً حرامً أولى
وقال الشيخ المفتي تقي العثماني في تكملة فتح الملهم (١/٥٦٧): وقد عرفه الإمام أبو بكر الجصاص بقوله: هو القرض مشروط فيه الأجل، وزيادة مال على المستقرض..وكان هذا الربا محرماً في سائر الأديان السماوية. انتهى – والله أعلم بالصواب

Appendix

The information provided in the question was from this picture below, sent by the questioner. Full details for the scheme can be viewed on the link (button) above.