If you opened this article to find out which Islamic mortgage companies are halal and which ones are haram, then save yourself the time and close this page now because you won’t get it here.
This past weekend I was fortunate enough to attend the annual AMJA [Assembly of Muslim Jurists of America] conference. They cover a different topic each year and this time it happened to be home financing. This is a topic I’ve had a personal interest in for some time, regrettably caused a stir over a while ago, and have a vested interest in now particularly because of the DebtFreeMuslims project I am involved with.
How I Snuck Past Security to Get In
The first struggle was figuring out if I could even attend. It is an Imams conference after all. But it was taking place in my city, and I really wanted to hear the discussions on the topic. I decided to go ahead and register.
You can see that the conference does have room for guys like me, although its quite a long and depressing scroll down to “Mr.” (as someone eloquently pointed out to me on Twitter).
It also just so happens that this good looking (sorry he’s married now) guy, who happens to be the CEO of MuslimMatters, was helping organize the conference. I had him verify it was ok to sign up.
Turns out the registration wasn’t that strict – a few locals usually end up attending depending on the topic. In general though, it’s for imams and the conference content is tailored accordingly to that audience.
Overview: Setting the Stage for a Real Discussion on Islamic Home Finance
Upon registration we received a comprehensive notebook with research papers examining the contracts of various Islamic mortgage companies. Various scholars at AMJA did their best to go through the contracts. They made observations on what they felt were pertinent to the shariah compliance of these contracts along with some suggested changes. Before you ask – no, I cannot share these notes [more on that in a minute].
The way the conference was set up was that a scholar from AMJA would make a presentation about the contract, and then the company (we heard from about 6 different companies this weekend) would then give a presentation. These were done by some combination of their executive/administrative members and scholars on their shari’ah boards.
The encouraging part of this for me was that it was the first time I heard a lot of these issues being discussed openly and in detail. It also seemed like the first time some of these companies were speaking openly with an organization such as AMJA. I have to commend the scholars for showing by example the proper adab for these types of situations. I was impressed that the scholars were able to openly speak about the issues without anyone taking it personally.
The main shortcoming was that it seems proper notification was not given to the companies about how the discussion would take place. This became readily apparent as the presentations went on. The research from AMJA wasn’t made available to the companies with enough notice to get answers from their shari’ah boards. Unfortunately that made it feel a bit like a congressional hearing on steroid use in baseball, but nonetheless it was a good step.
Ideally, the research from AMJA should have been given to the companies a couple of months in advance. This would have allowed them to take suggested changes into consideration and then come back to a conference like this and explain what changes they made, and if they couldn’t implement something then why.
In addition to the banks, we also heard from a small housing co-op. It wasn’t critiqued in detail, but some pointed out that while it may be seemingly more shari’ah compliant in terms of the actual contract, it also faces difficulty in that it carries higher risks, long wait times, and is not scalable to actually be a national solution [the second they commercialize to that scale, they would be subject to the same regulatory requirements that throw a wrench in the other finance contracts].
The majority of discussion was at a very academic level, and analyzing very specific issues in some of the contracts and the mechanisms by which it was achieved. We learned the basics of the various Islamic companies, their core business, the types of financing they offer, and examining those specific contracts in light of shari’ah concerns and suggestions to fix objectionable parts of the contract.
As for the outcome of the conference, the finance companies’ shari’ah boards will look at the points raised at AMJA. They’ll go back and forth with each other for a bit and then present the final research to a larger assembly of global scholars to try and get final rulings. This process will take a few months. No final rulings were issued on any company at the conference (that’s why I told you to stop reading this post earlier if that’s what you were looking for).
The Big Picture
Islamic finance has to satisfy:
- Shari’ah Constraints – so its halal.
- Regulatory and Legal Requirements – so the government doesn’t shut you down.
- Investors – There has to be a viable business so people can make money [interest is haram, profit is not].
- Customers – Someone actually has to buy this thing you’re selling.
What this lays out for us is the big picture. A shari’ah compliant contract cannot exist in a vacuum. Otherwise, as common sense would dictate, every single one of these companies would just have a 100% shari’ah compliant contract that had no objections and just use that. But because we live in a world with specific realities, that is not the case.
Traditionally, the borrower/lender relationship in Islam is one of charity. Now it’s the predominant mode of business. No matter what solution we try to provide, we have to understand that solution is being implemented within a global system that is based on interest. This presents a number of complex realities that must be dealt with.
What may look like “repackaging existing mortgage contracts” on the outside is actually years and millions of dollars of research trying to figure out how to jump through hoops to put a shari’ah compliant program in place without crossing the boundaries set by their advisory boards and things like the AAOIFI standards.
We don’t see the research process that went into how the contracts were developed. Often times it consists of taking a shari’ah contract, trying to implement it then running into a legal or regulatory roadblock. Then they adjust the contract, within bounds of shari’ah to bypass that roadblock and move on til they hit the next one, and so on. This is further complicated by the fact that many of the government regulations are themselves nonsensical. Add to that how different contracts have implications in terms of taxes and so on and it gets complicated quickly. Some of the contracts are 200+ pages in length, and what we often see is a summation in English that doesn’t truly represent what went into the decision making process.
A lot of us sit back and assume there are simplistic solutions to these problems. Foreign investors are hard to find because they get better rates of return in other emerging markets. One of the reasons is due to government subsidies to keep the prices low (another complication to the whole process).
One thing that validates a lot of what is written above is the fact that many of the Islamic finance products are not available in certain states in the US. The reason is because complying with the regulations in those specific states would force them to bend the contracts beyond what their advisory boards would consider to be acceptable in regards to the Shari’ah. This costs them millions of dollars in business.
One question that comes up is to say that we should force the system to change. Here’s the truth. As far as Freddie and Fannie are concerned, the entirety of the Islamic finance industry here is barely a rounding error on their 2 trillion dollar+ balance sheet (as David Loundy from Devon so eloquently put it). The other sad reality is most Muslims simply do not care. How many Muslims would willingly take a mortgage where they had to give up a share of the profits when selling their house? One company said they tried it in a limited format and no one would sign up for it. Less than 10% of the Muslim audience is concerned with Islamic financing, and of that 10, only 1% are truly concerned for the shari’ah. The other 9 will simply go with whoever has the cheapest monthly payment. Some might say this is pinning ourselves in a corner and a position of weakness, but it’s reflective of reality.
By the same token, even with the big picture realities we deal with, the details cannot be overlooked either. Even though a lot of details and technicalities were discussed – those details are still extremely important. In many cases they can change a contract from being prohibited to permissible and vice versa.
The details help determine whether some of the liberties being taken are truly to fit the system, or if they’re a back door to interest. Are the contracts providing an illegitimate loophole for some kind of evil aim, or utilizing legitimate flexibility to fulfill a noble aim? We are truly in need of work-arounds to achieve the aims of the shari’ah and make things easy for Muslims. The details help make sure that the overarching wisdom of the technicalities within the shari’ah are complied with and not completely stripped of meaning. When this happens, people begin mocking the shari’ah altogether.
Going forward, I think it’s important to understand the roles at stake and how they can provide good checks and balances. I think AMJA serves an essential role in that they can provide outside scholarly insight. This is critical in that it’s a shari’ah advocacy and can do it’s best to provide an outside check on contracts to make sure Islamic principles aren’t being compromised. The everyday Muslim consumer also plays a role in that they can demand more transparency from these organizations. I personally felt a lot of debate that’s taken place over the past few years could have easily been avoided with some level of openness. But until we demand it, there is no incentive for anyone to open up. These components together can help push us toward a viable Islamic finance model in the US.
Litmus Test for Selecting an Islamic Finance Company
This is vital for most of us. We forget sometimes that we aren’t experts in Shari’ah, regulatory requirements, economics, or finance. This means at some point we must put our trust in established scholarship and make a decision. How do we know what company to pick, especially if we’re unable to navigate the murky waters of finance and regulations?
1. Is the Islamic finance company adhering to the AAOIFI standards?
Scholars from both AMJA and the finance company advisory boards advocate operating within the AAOIFI framework (one of the few points of agreement :)). This is the auditing organization for Islamic finance institutions. They all get their certifications from AAOIFI, which is headquartered in Bahrain.
2. Do they have a qualified independent shari’ah advisory board? Has this board actually issued a fatwa? And do they interface regularly with the institution?
You can look up the scholars on their board and see if they are trustworthy and qualified. Not just any scholar can sit on these boards, but they need to have expertise in the fiqh of finance and also an understanding of modern finance.
Unfortunately some companies are independently running without actual scholarly input. An example of this is a company that posts a fatwa thats similar to the model they use, but they don’t have an actual shari’ah advisory board.
I feel compelled to mention that only one company that presented at AMJA had no scholarly board. In fact, they seemed to take pride in that fact and bragged that they “don’t buy scholars.” The other companies supplied AMJA with updated contracts and information, but this company would not do so unless AMJA signed a non-disclosure agreement that essentially said they would sue AMJA if they said anything bad about them. When given a chance to present their side of their finance model at AMJA, they simply spoke in broad cliches and made some thinly veiled personal attacks at the AMJA scholars which was truly disheartening.
I mention this story to illustrate a couple of things. First, it is true, there definitely are companies that are operating outside relatively agreed upon frameworks. Because they’ve completely disregarded scholarly oversight, they make it difficult for anyone to take them seriously, but worse – they entrench the stereotype of just playing with the shari’ah and throwing together a conventional mortgage with a new package. Second, I mention it because it actually gives much more credibility to the other organizations. Simply showing a willingness to be transparent with an outside body like AMJA and discuss these issues in detail in such a venue gave me an immense amount of respect and confidence in their efforts.
Since the conference ended, I have been inundated with messages on Twitter, Facebook, email, and even phone conversations (that’s the sign of it getting serious). I’ll start by sharing some of the sentiments others have expressed to me and offer some closing thoughts at the end.
All Islamic Finance is a sham. You can put lipstick on a pig, but it’s still a pig. We don’t need Islamic finance anyway.
Being cynical is definitely the easy route. It takes more work to be able to give someone the benefit of the doubt. I’ve struggled with this myself, but finally hearing things in the open had a large effect on me. There are sincere people who have made huge sacrifices to try and figure out a way to bring halal alternatives to us so that ultimately we can achieve our goals in a halal manner. It’s extremely disingenuous to throw the whole thing out dismissively.
When you hear from scholars who have dedicated themselves to this field longer than most of us have been alive – you develop a huge appreciation for the work they’ve put in, and how foolish it is to just cast the efforts aside.
They’re just in it to make a bunch of money.
Interest is prohibited, profit is not. As long as the service is halal, I’m okay with it. As for why some companies might charge more than a traditional bank it simply comes down to volume. Big banks (you know, the too big to fail kind) have millions in write-offs built into their budgets. They can afford to do this because of the level of revenue they have. A smaller, Islamic, institution simply doesn’t have that kind of flexibility.
These scholars don’t know what they’re talking about. They just find loopholes to do the haram.
Most of us are not experts in finance, economics, business, law, government regulations, Islam, fiqh, usul al-fiqh, fiqh al-mu’amalat, financial transactions, and Islamic finance. Heck, most of us don’t even know Arabic. We don’t even know what bay’ ul-‘eenah and tawarruk are. It’s ironic then, that we presume ourselves to have a higher expertise on every single one of these subjects than scholars who are experts in these subjects. Let’s give them some benefit of the doubt.
What really strikes me, is that most people who make these accusations would never say it to the face of one of these scholars.
That’s not to say they’re above making mistakes or anything like that. The point is that there’s a way to handle those. I feel that the AMJA conference is a good first step in that direction. People with actual credibility and training in these subjects can challenge objectionable points and work with them to try and find resolutions.
It wasn’t terribly long ago that our parents’ generation was putting down roots here to raise us. This meant figuring out ways to make a living, try to put their kids through college, build masjids, Islamic schools – and yes, buy homes. Due to the lack of options, they invariably took traditional mortgages from the bank. We’re at least blessed in the sense that we have some options. We can agree that there’s a lot of work to be done – however, it’s up to us to advocate for a particular solution. Do we want to just kill the whole thing because we have some deep seeded animosity toward it? Or work with it and hope that better solutions continue to emerge for the next generation?
Highly Educated, Willingly Domesticated
Doctor. Engineer. Certified Nurse-Midwife. Writer and Literary Critic. Lab Technician. Parliamentary Assistant. These highly-trained, respected careers are the culmination of years of intense study, training, and self-discipline. Most people, upon achieving these esteemed positions, would happily dedicate the rest of their working years to putting their knowledge and expertise to use. They would gradually gain more experience, earn greater pay, and amass professional perks. Most likely they would also, over time, assume leadership roles, earn awards, or become sought-after experts in their field.
What kind of person has all this at her fingertips, but decides to give it up? Who would trade in years of grueling study and professional striving for an undervalued position that requires no degree whatsoever What type of professional would be willing to forgo a significant salary to instead work for free, indefinitely, with no chance whatsoever of a paycheck, recognition, benefits, or promotion?
Who else, but a mother?
While certainly not all mothers choose to give up their careers in order to raise their children, there is a subset of women who do. Stay-at-home-moms (SAHMs) may spend the majority of their days performing unglamorous tasks like washing dishes, changing diapers, and reading storybooks to squirming toddlers, but behind the humble job title are dynamic, educated, and capable women. They may currently have a burp cloth in one hand and a sippy cup in the other, but chances are, SAHMs have a mind and capabilities that reach far beyond the apparent scope of their household duties.
What motivates a capable and ambitious woman to give up her career and stay home to raise children? Is she coerced into it, or does she choose it willingly? What is her driving force, if not money, status, or respect? I had many questions for these women -my sisters in Islam and my stay-at-home “colleagues”- and some of their answers surprised me.
For this article I interviewed seven highly-educated Muslim moms who chose to put successful careers on hold, at least temporarily, to raise their children. Between them, they hold PhDs, MDs, and Masters degrees. While the pervasive stereotype about Muslim women is that they are oppressed and backward, these high-achieving females are no anomaly. In fact, according to her article in USA Today, Dalia Mogahed points out that, “Muslim American women are among the most educated faith group in the country and outpace their male counterparts in higher education.” Across the pond, The Guardian reports that “more young Muslim women have been gaining degrees at British universities than Muslim men, even though they have been underrepresented for decades.”
Ambitions and dreams
Every single one of the women I interviewed grew up in a household with parents who highly emphasized their daughters’ education. In fact, all of them were encouraged -either gently or more insistently- to pursue “top” careers in medicine, engineering, or science. Perhaps unsurprisingly, most of the women I interviewed were at the head of their classes at university.
In their school years, before marriage, all of the women I spoke with considered their career to be their main priority; motherhood seemed far-off and undefined. “When in uni,” explains Neveen, an endodontist who eventually put her career on hold to be a SAHM and homeschooler, “I never, ever thought I’d homeschool (nor did I believe in it), nor did I ever think I’d be a SAHM. I was very career-oriented. I was top of my class in dental school and in residency.”
“I absolutely thought I would be a career woman,” agrees Nicole, a mom of three in California who holds a Masters degree in Middle East Studies. “I never considered staying at home with the kids, because they were totally out of my mind frame at the time.”
“I expected that after graduation I would follow a research-based career,” adds Layla*, another SAHM in California who holds a PhD in Computer Engineering. “I never thought I’d stay at home because I believed it was fine for kids to be in daycare. I also thought SAHMs were losing their potential and missing out on so much they could otherwise accomplish in their lives.”
As young women, many assumed that if they ever chose to start a family, they would have assistants, nannies, or domestic helpers to lighten their load. Several of them believed they would put their future children, if any, in daycare. However, the reality of motherhood made each of these women change her mind.
“My child was highly attached to me,” explains Sazida, an Assistant to a Member of Parliament in England, “and I could not envision him being looked after by anyone else despite generous offers from relatives.”
“After I had my first child all I wanted to do was be able to care for her myself,” concurs Melissa, a Certified Nurse Midwife from New York.
It turns out that maternal instincts were not the only factor that made women choose to drop out of the workforce. Dedication to Islam played an enormous part in their decision-making.
“After having my first child,” explains Layla, “I decided that he was far more precious than working. He is a gift that Allah gave me to protect and care for.”
“After I became Muslim,” shares Nicole, “My goals changed, and I hoped to marry and have children. I do think it was beneficial for my children to have a parent always there to depend on,” she adds. “I feel like I was the anchor in the family for them, and I hope to continue that role.”
“What’s important to me,” asserts Neveen, “Is to raise my kids as good Muslims who love -and are proud of- their life and deen.”
Another reason many highly educated women choose to stay at home is because they have the opportunity to homeschool some or all of their children. Remarkably, out of the seven women who answered questions for this article, five reported that they chose to homeschool at least one child for a few or more years.
“I really enjoy my homeschooling journey with my kids and I get to know them better, alhamdullilah,” states Layla.
The opportunity to nurture, educate, and raise their children with love and Islamic values is the primary reason why these talented women were willing to put their successful careers on hold. “Hopefully Allah will reward us in Jannah,” muses Layla.
Although none of the women I interviewed regrets her choice to be a SAHM, they all agree that it is a challenging job that is actually harder than their former career.
One obstacle they must overcome is the negative perception others have about successful women who make the choice to put their career on hold. “I soon learnt that casual clothes, a toddler, and a buggy don’t give you the same respect as suits and heels,” says Sazida.
One would expect, given their faith’s emphasis on the dignity of mothers, that Muslim SAHMs would enjoy the support of their family and friends. Unfortunately, this is not always the case.
One mom explains, “My in-laws offered to look after my child, and my father-in-law couldn’t understand why I wanted to stay at home when there was perfectly good childcare that they were offering. After two and three years passed, he got more and more disheartened that I was not earning and complained about the lost potential income.”
“My non-Muslim mother told me that I wasting my education,” confides Nicole. “She did not support me staying home, though I think she appreciated that I was there for my children and have a good relationship with them. She was a SAHM as well, so I am not sure where that was coming from, actually.”
Melissa’s mom was similarly skeptical of her daughter’s decision. “My mother didn’t love me being fully dependent on my husband,” she admits.
“I was not at all supported by my family or friends,” laments Radhia, a Lab Technician with a BS in Microbiology with a Chemistry minor.
Other than being doubted and blamed for their choice, there are other challenges that SAHMs face. Accustomed to mental stimulation, exciting challenges, professional accomplishments, and adult interaction, many former career women find staying at home to raise youngsters to be monotonous and lonely. The nannies, assistants, cleaners, and other workers they had envisioned often never materialized, since hiring these helpers was usually too expensive. Husbands who spent the day working as the family’s sole breadwinner, were usually too tired to help with household duties. A few women admitted that they felt guilty asking for help in the home when their husband was already exhausted from work. To exacerbate the problem, most of the women I interviewed lived far from family, so they could not rely on the help one normally gets from parents and siblings. That means the bulk of the childcare and housework fell onto their laps alone.
“The main challenges for me,” states Nicole, “were boredom, and finding good friends to spend time with who had similar interests. I was also very stressed because the raising of the children, the housework, the food, and overall upkeep of our lives were my responsibility, and I found that to be a heavy burden.”
“I think the feelings of vulnerability and insecurity about whether I was a good enough mother and housewife was difficult,” shares Melissa. “All my sense of worth was wrapped up in the kids and home, and if something went wrong I felt like a failure.”
“It was not as easy as I thought it would be,” confesses Radhia. “It was overwhelming at times, and I did miss working. Emotionally and physically, it was very draining.”
“Staying home has been harder than I expected,” adds Summer*, a Writer and Literary Critic from Boston. “I didn’t realize how willful children could be. I thought they’d just do what I said. I’m still trying to get used to the individuality! It’s harder than my job was, only because of the emotional load, and the fact that the effort you put in doesn’t guarantee the results you hope for.”
Giving up their salary also put women in a state of financial dependency, which can be a bitter pill to swallow for women who are used to having their own resources.
“I felt very dependent on my husband, financially,” says Radhia.
“Alhamdulillah, my husband does not refuse if I ask him to buy anything,” explains Layla. “However, I felt like I was losing my power of deciding to buy something for someone else. For example, if I want to buy a gift for my mother or my sister, he never refuses when I ask him, but still I feel internally it is harder for me.”
“Alhamdulillah my husband’s personality is not one that would control my financial decisions/spending,” shares Neveen. “Otherwise I would never have chosen to be a SAHM.”
“Giving up my career limited my power to make financial decisions,” asserts Summer. “I could still spend what I wanted, but I had to ask permission, because my husband knew when ‘we’ were getting paid, and how much. He paid the bills, which I didn’t even look at.”
“Asking permission,” Summer adds, “is very annoying.”
Re-entering the workforce was difficult for some women, while not for others. The total time spent at home generally affected whether women could easily jump back into their profession, or not. Some of the moms felt their skills had not gotten rusty at all during their hiatus at home, while others felt it was nearly impossible to make up, professionally, for missed time.
Words of Wisdom
Although all of the women I interviewed firmly believe that their time at home with their children is well-spent, they do have advice for their sisters who are currently SAHMs, or considering the position.
“If I could go back and speak to myself as a new mum, I would tell myself to chill the heck out and just enjoy being a new mum,” says Sazida.
Melissa offers, “I wish people understood how talented you have to be to run a home successfully. It’s a ton of work and it requires you to be able to do everything from snuggle and nurture, to manage the money, budget, plan precisely, be a good hostess, handle problems around the home, manage time, and meet goals all while trying to look cute.”
“I would always recommend that women have their own bank account and money on the side,” advises Nicole. “You never know when you are going to need it.”
“Once their kids are in school,” adds Radhia, “I would suggest SAHMs start something from home, or take on part time work, or courses, if necessary.”
“For moms choosing to stay at home,” Layla suggests, “I would say try to work part-time if your time permits, and if you have a passion for working. Trust that Allah will protect you, no matter what. Remember, you are investing in your kids, and that is far more important than thinking ‘I need to keep money in my pocket.’”
Support, don’t judge
As a Muslim ummah, our job is to support one another as brothers and sisters. It seems people forget this oftentimes, and erroneously believe that we are entitled to gossip, speculate, and sit in judgement of each other, instead. In our lives we will all undoubtedly encounter women who choose to continue their careers, and those who put them on hold, and those who decide to give them up completely. Before we dare draw conclusions about anyone, we must keep in mind that only Allah knows a person’s entire story, her motivations, and her intentions. Only He is allowed to judge.
We must also remember that some women, for a variety of reasons, do not have the luxury of choosing to stay at home. They must work to the pay the bills. Allah knows their intentions and will reward their sacrifices as well.
It is my hope that this article will not cause more division amongst us, but rather raise awareness of the beautiful sacrifices that many talented and intelligent women willingly make for the sake of their children, and even more so, for the sake of Allah . They are the unsung heroes of our ummah, performing an undervalued job that is actually of utmost importance to the future of the world.
*Name has been changed
For the past decade, writer Laura El Alam has been a regular contributor to SISTERS Magazine, Al Jumuah, and About Islam. Her articles frequently tackle issues like Muslim American identity, women’s rights in Islam, support of converts/reverts, and racism. A graduate of Grinnell College, she currently lives in Massachusetts with her husband and five children. Laura recently started a Facebook page, The Common Sense Convert, to support Muslim women, particularly those who are new to the deen.
OpEd: Breaking Leases Into Pieces
Ali ibn Talib once said, “Know the truth and you’ll know who’s speaking the truth.”
I am based in Canada and was recently having coffee with friends. In the course of the conversation, a friend (who I consider knowledgeable) said that it’s okay to pay interest on a leased car because interest doesn’t apply to lease contracts. This completely caught me off guard, because it made no logical sense that interest would become halal based solely on the nature of the contract.
I asked him how this can be true and his response was that the lease contract is signed with the dealer and the interest transaction is between the dealer and the financing company so it has nothing to do with the buyer. Again, this baffled me because I regularly lease cars and this is an incorrect statement: The lease agreement is signed with a third party financing company who is charging you directly for the interest they pay the car dealership. Therefore, any lease contract that has interest associated with it is haram. This is the same as saying your landlord can charge you interest for his mortgage on a rental contract and this would make it halal. I tried to argue this case and explain to my friend that what he was saying was found on false assumptions and one should seriously look into this matter before treating riba in such a light manner.
Upon going home that night, I pulled out all my lease contracts (negotiated to 0% mind you) and sent them over to my friend. They clearly showed that a bill of sale is signed with the dealer, which is an initial commitment to purchase but the actual lease agreement is signed with a third party financing company which is charging you interest directly. If this interest rate is anything above zero it is haram (anything which is haram in a large quantity is also haram in a small quantity).
To my dismay, instead of acknowledging his mistake, my friend played the “Fatwa Card” and sent me a fatwa from a very large fatwa body in North America, which was also basing their argument on this false assumption. Fortunately for me, my friend pointed out the hotline number and the day and time the mufti who gave the fatwa would be available to answer questions.
I got in touch with the scholar and over a series of text messages proceeded to explain to him that his fatwa was based on a wrong assumption and for this reason people would be misled into leasing cars on interest and signing agreements with financing companies which are haram.
He was nice enough to hear my arguments, but still insisted that “maybe things were different in Canada.” Again this disappointed me because giving fatwa is a big responsibility – by saying “maybe” he was implying that full research has not been done and a blanket fatwa has been given for all of North America.
It also meant that if my point was true (for both Canada and the United States) dozens of Muslims maybe engaging in riba due to this fatwa.
The next week I proceeded to call two large dealerships (Honda and Toyota) in the very city where the Fatwa body is registered in the US and asked them about paperwork related to leasing. They both confirmed that when leasing a new vehicle, the lease contract is signed with a third party financing company which has the lien on the vehicle and the dealer is acting on the financing company’s behalf.
It is only when a vehicle is purchased in cash that a contract is signed with the dealer. This proved my point that both in the US and Canada car lease contracts are signed with the financing company and the interest obligations are directly with the consumer, therefore if the interest rate is anything above 0% it is haram. I sent a final text to the mufti and my friend sharing what I had found and letting him know that it was now between them and Allah.
1. As we will stand in front of Allah alone on Yaum al Qiyamah, in many ways we also stand alone in dunya. You would think that world renowned scholars and an entire institution would be basing their fatwas on fact-checked assumptions but this is not the case. You would also think that friends who you deem knowledgable and you trust would also use logic and critical thinking, but many times judgment is clouded for reasons unbeknownst to us. We must not take things at face value. We must do our research and get to the bottom of the truth. Allah says to stand up for truth and justice even if it be against our ourselves; although it is difficult to do so in front of friends and scholars who you respect, it is the only way.
2. There are too many discussions, debates and arguments that never reach closure or get resolved. It is important to follow up with each other on proofs and facts to bring things to closure, otherwise our deen will slowly be reduced to a swath of grey areas. Alhamdulillah, I now know enough about this subject to provide a 360 degree view and can share this with others. It is critical to bring these discussions to a close whether the result is for you or against you.
3. Many times we have a very pessimistic and half hearted view towards access to information. When I was calling the dealerships from Canada in the US, part of me said: Why would these guys give me the information? But if you say Bismillah and have your intentions in the right place Allah makes the path easy. One of the sales managers said “I can see you’re calling from Toronto, are you sure you have the right place?” I replied, “I need the information and if you can’t give it to me I don’t mind hanging up.” He was nice enough to provide me with the detailed process and paperwork that goes into leasing a car.
Finally, I haven’t mentioned any names in this opinion and I want to make clear that I am not doubting the intentions of those who I spoke to; I still respect and admire them greatly in their other works. We have to be able to separate individual cases and actions from the overall person.
May Allah guide us to the truth and rid of us any weaknesses or arrogance during the process.
Ed’s Note: The writer is not a religious scholar and is offering his opinion based on his research on leasing contracts in North America.
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This article is part of a paid promotional package for Wahed Invest LLC.Wahed Invest LLC is registered as an investment adviser with the Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Custodial and brokerage services are provided by Apex Clearing Corporation, member of New York Stock Exchange, FINRA and SIPC. Any returns generated in the past are no indication of future returns. All securities involve some risk and may result in loss. This is not an offer, solicitation, or advice to buy or sell securities in jurisdictions where Wahed Invest is not registered. For full terms and conditions please visit www.wahedinvest.com
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