HP Car Financing Clarification

Everyday Islamic Finance
#1

Assalam alaikum,

I have read this useful article on car financing. However, I would like extra clarification on the three general conditions stipulated for HP financing to be halal:

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The first one is clear in the contract I want to sign. The contract states that the lender owns the goods (in this case the car). However, I don’t really understand the second and third conditions.

With regards to the second condition, the contract states you can walk away and return the car providing you have cleared half the total balance (and if you haven’t then you must clear this first). So this seems to address the second part of condition 2) - but I don’t understand the “clear option agreement part”.

As for the third condition, I am not sure how to evaluate whether there is a clear separation between hire and purchase.

I can forward the exact contract for evaluation if need be.

#2

Yes, you can use HP car financing to buy any car you like. There is no limitation on what you buy as long as you have a valid license and proof of employment. You can even finance a brand-new car, but you must pay the full amount upfront. If you need more information, visit Xpress auto loan.