Fatwa #4003023 October 2018Saudi Arabia
Is this car lease permissible?
Question
Assalam-o-Alekum,
I live here in Perth Western Australia, and I need to buy a car through Orix using method of Novated leasing.
You can find information about Orix Novated Lease here
I need to know whether it is permissible to buy a car using this method.
I would be grateful if you reply in detail in either csae whether permissible or not becuase I am asking this question for myeslf and my other friends aswell.
JazakAllah Khair.
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
A novated lease is simply a three-way contract between a finance company, an employer and an employee. The employer is essentially an agent for the employee in deducting the rentals from the salary of the employee and paying the finance company. The employee can potentially save on GST and tax charges. According to the information provided, this contract would be permissible subject to other terms and conditions of the contract being Sharia compliant.
We advise you to refer to your local Muftis to analyze the contract as they are in a better position to understand the local laws and their implications. If need be, the local Muftis may then correspond with us further.
And Allah Ta’āla Knows Best
Checked and Approved by,
Mufti Ebrahim Desai.