Purchasing bank-repossessed vehicles
Question:-
Is it permissible to buy a bank-repossessed vehicle? I know that some Mufti’s have indicated that it is better not to, as these vehicles are the result of oppression by the banks who repossess the car without refunding the owner any monies that they had paid towards the car. Considering that, generally, there is a higher risk of mechanical issues that older, used cars have, these bank-repossessed cars are a more affordable option as they are often sold via auction at lower prices.
Secondly, what if a dealership buys these vehicles at an auction and then sells them to a Muslim customer, and does not disclose that it was a bank-repossessed car, would this be permissible?
Answer:-
If the bank enters into an agreement with their clients that, if they fail to meet their monthly installment, their vehicle will be repossessed, such an agreement is acceptable according to some Ulama. In this case, the bank becomes the owner of the vehicle (when repossessed) and, if sold on auction, the vehicle may be purchased by buyers.
Other Ulama are of the opinion that, if the client is unable to meet his monthly installment, then the bank should return the total money paid by the client (towards the vehicle), and then repossess the vehicle. However, this is not possible with the commercial banks (in our country) as all monies paid towards the vehicle are forfeited; hence, this option does not exist.
Notwithstanding the above, there are those clients who pay most of the installments towards their vehicles, and by missing just a few installments (due to financial difficulty), their vehicles are repossessed. This goes against the very grain of Shariah as the Quraan Sharif states, “If he (the debtor) is in financial difficulty, then allow him grace until a time of ease. (However, remember that) it is better to be charitable if you only knew (the tremendous reward for this act).” [Surah Baqarah – Verse 280]
In conclusion, although some scholars are in favour of repossessed vehicle auctions (as understood from the above explanation), it is better to refrain even though one may be purchasing the vehicle at a discounted price, as the vehicle has been forcefully repossessed from the owner, many a time due to a minimal amount outstanding. The Hadith states, “The wealth of a Muslim brother is not Halaal except with a happy heart.” Similarly, we are taught in Shariah to assist fellow Muslims at the time of need (by assisting them to pay the settlement amount and free their vehicle in this instance) and not take undue advantage of them. Yes, we understand that repossessed vehicles are not only taken from Muslims and are repossessed from both Muslims and Kuffar. However, when there is happiness from both sides, then one is blessed with abundance of Barakah, and in the case of repossessed vehicles, the owner of the vehicle is generally left unhappy and aggrieved, particularly when he has already met majority of the installments, hence, abstention is advised. If one is able to purchase a good vehicle from an honest and reliable dealer, on terms and free of interest, then one should opt for such a transaction. Alternatively, one may take an interest-free loan and purchase a vehicle from a private seller or dealership.
Yes, if a dealer purchases vehicles at a repossessed auction and sells it to his clients without disclosing the background of the vehicle, then the sale will be valid according to those scholars that approve of repossessed auctions, and the purchaser will become the owner.
عن بن عباس أن رسول الله صلى الله عليه و سلم قال المسلم أخو المسلم لا يحل له دمه ولا شيء من ماله إلا بطيب نفسه ألا هل بلغت قالوا نعم قال اللهم أشهد (سنن الدار قطني)
ALLAH TA’ALA KNOWS BEST!
ANSWERED BY:
Mufti Mohammed Desai
Date: 19 Shawwal 1444 / 10 May 2023