Car Finance PCP explanation

Salaam, appreciate the work you guys do here.

I have a query in regards to the article on PCP / HP car finance.

So i understand each individual contract for PCP would have to be reviewed to determine Shariah compliance, but i have some questions they are not specific agreement related but more principles:

  1. Would it affect permissibility if the financier was the manufacturer owned finance company, or instead a 3rd party?
  2. If i was to provide a PCP contract for review - how should i do so?
  3. If it was deemed the contract was halal what would that mean (from a permissibility perspective) if I was not to keep the car the full term of the PCP e.g. 4 year term, and i decided after 2 years i need to change so would have to sell the vehicle and clear the finance, would this make the PCP (from a principle perspective) impermissible?
  4. If it was deemed the contract was halal what would that mean (from a permissibility perspective) if I kept the vehicle for the term and then chose the option of purchasing the vehicle from the financer at the pre-determined price of X amount, would this be permissible?

I would like to say barakallahu feekum for your efforts, you have done a great job in providing islamic context for modern finance related topics. They have no doubt helped many a layman like myself.

Would really appreciate your thoughts on the above, so many thanks in advance.


Interesting questions and I am about to potentially take a PCP agreement out too, so replying in the hope this gets thread some traction.

Salaams @ibrahimkhan,

In light of the article on Car finance and the above - I would really appreciate any review of the following PCP proposal I am looking to enter into on Monday. They have terms and conditions too but they seem quite general (i.e. doesn’t relate to the PCP proposal, more the terms of vehicle delivery etc).

Shoaib Khan

@ibrahimkhan @Mufti_Billal

Salam brothers just bumping this in hopes of a response

Jazakallah khair