While I agree that financing is better, I am not the best at explaining, nor am I an expert. Qualified scholars are better at explaining the difference. leasing is more of an exception than the norm when it comes to how we deal with interest. there are a couple of main areas that make leasing and the interest on it not prohibited. 1: I am not the owner nor will I be once the contract is over. So I am not the one carrying the risk if something happens to the car (kinda like renting a house) 2: the final price is agreed upon, as in it won’t accumulate interest (the rent fee aka the interest in this case is charged upfront). yes, both are types of interests, but they are not the same from a religious standpoint. I am not an expert so I am not doing the topic any justice since it has way more intricate details.
As for the question of why we won’t finance even if it’s a better option, I like to think about it this way, if a pound of pork is 3$ and a pound of beef is 5$, I still can’t go eat pork cause it is the better financial decision. They are both sources of protein, just like both loaning and leasing have interest.
The interest is not charged upfront, it is earned monthly, that is why when you buyout a lease early, the “unearned interest” is subtracted from the lease payoff.
See this example from a BMW payoff 2 months into the lease, “Unearned Amount” is the interest that hasn’t accrued yet:
Note please that I am not trying to argue with you, and I respect that this is a limitation of your religion, but the point I am making here, if anything, is to tell you that if it really is important to you to not violate your religious laws, leasing still is not some workaround for paying interest, it earns monthly like any other loan.
With all due respect, but do these scholars have a line or verse from 7th century where the car lease was compared to auto financing? I assume not (and you can correct me if I am wrong). As poster above mentioned, you will be paying interest on capital borrowed, whether you call your transaction MF/lease or interest/finance. As such, lease does not provide a workaround that would allow you to avoid paying an interest.
Obviously no, the quran stated what is allowed and what it not. It does mention different types of intrest which most are prohibited. But this reminds me of what the prophet (pbuh) said about how a “A time will surely come upon people in which none will remain but that he consumes usury. If he does not consume it, he will be afflicted by its dust.”.
I do appreciate it that you guys are explaining the topic more to me because my understanding of the topic isnt the best.
Can’t argue MMR, I don’t have access to it. Above is a screenshot from black book which, allegedly, sources information from both the wholesale auctions and private transactions (and updates weekly), hence multiple columns and two charts. You can contact publisher, BB, and let them know your thoughts.
On a separate note: isn’t MMR a statistical average of what dealers pay for a car at Manheim auction? If so, this (21K) must be a wholesale price of cars they must recondition and change brakes/tires (not necessarily certify, that’s an option for dealer if they want to mark up the sales). Why do you think no one will pay more than 18-19 for it, if they already pay 21 according to MMR report?
Regardless, you will be engaging in what your religion defines as usury if you lease a car, just as if you were to finance a car. You can either refrain from both (if you have a strong belief that it’s a sin for which Allah will punish you), or you can chose the most useful option for you, lease or finance.
Mmr is a representation of what a dealer that wants to purchase a vehicle to resell has paid. Most dealers buying trades are planning on wholesaling the vehicle, so they need to have margin to sell at auction and come out ahead.
I don’t have access to MMR, but do you know how it compares to Carmax offers***? Is Carmax offer lower than MMR, or is it on par with MMR, since both sell/buy at wholesale?
***I understand that you need specific vin and each car is unique, therefore asking about statistical averages. If you run 100 cars through MMR and then through Carmax, how will one compare to another?
As to dealers offering under MMR (or Carmax in my case), I had this issue with my GLC when I was considering a trade for new GLE or Macan. Many dealers tried to lowball me and pay me 2K-5K less than wholesale (as mentioned, in my case Carmax was used as reference) value for GLC, justifying it by their cost to recon , change tires/breaks, put it on sale as CPO. In my opinion, although that’s good thing for a dealer to do, it is absolutely unjustified under existing market conditions. Therefore, I never traded my cars for below wholesale (or Carmax offer, which usually matched my payoff quote) to any dealer. But, I also have to say that my cars were in outstanding condition, with the exception of Jetta that truly needed replacement of the back rotors and break pads, though it still was in pristine cosmetic condition with engine/transmission and computer all intact. I understand how this may not work if you trade to brand name dealer a high mileage/older car that he knows he can’t recon and resell on his lot, but will have to send to Manheim to get rid of (and pay transportation and costs related to listing it as is). So, it must be situational and depend on individual circumstances. But I would definitely try my best to get the wholesale value if I was to trade my car and not give it up for anything less than that.
