Leasing cars with a mileage cap


بســـم اللــه الرحــمــن الـرحـــيــم

▪️Leasing cars with a mileage cap▪️

Our Shaykh, Muhammad ibn Hizaam -may Allaah preserve him- was asked the following question:

? Question:

There’s a car showroom which leases out cars for two years, but they have a cap on how many kilometers one can drive, if one exceeds this cap they incur an excess charge per meter. So is this transaction permissible, are we allowed to be involved in this and is it permissible to agree to it?

? Answer:

This transaction is permissible. It is free from Gharar (*) & Jahaalah (*), because the contract length is set and the cap on how many kilometers one can drive has also been specified, and they’ve informed you beforehand that exceeding this cap incurs an additional charge, set at such and such rate.

So from what’s apparent, there doesn’t seem to be any Jahaalah in this transaction, therefore it’s permissible, because they’ve leased the car over to you for two years and they’ve specified a clause that even though your lease runs for two years, you cannot exceed the mileage cap, and if you do, you will incur an excess charge set at a rate of such and such. This is a clear and straightforward transaction, free from any Gharar & Jahaalah, so it’s permissible.

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T.N.

(*) Gharar: refers to selling something which isn’t present, or something whose outcome is unknown – such as selling a baby lamb that’s yet to be born or crops not yet harvested or fish that’s still in the sea. “The Prophet ﷺ forbade transactions involving Gharar.” [Narrated by Muslim from the hadeeth of Abu Hurayrah]

(*) Jahaalah: ignorance of crucial information related to the transaction on either part (buyer / seller), eg. Price, timings, any conditions, etc

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Translated by:

Abu Ishaq Muhammad Ibn Ahmad Ba ‘Alawi

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Original Fatwa:

https://t.me/ibnhezam/5850