As Salam Waluikum,
I am planning to buy a new car. The offers the car company providing is to pay the cost in EMI or Easy Monthly Installments at a certain interest. It means that if I take up the offer then I would end up paying more than the cost of the car. Is this type of installement allowed in Islam?
If the cash price is different from the installment price of car then it is permissible to buy a car as long as the price of either option is fixed.
If the seller agrees to accept the payment for car in installments but raises the price of the car then it is permissible to purchase such a car.
This kind of addition to the price of car is not considered interest. It would be considered interest if the loan was taken from a third party and the lender charged an addition money over the original loan. This additional money is considered interest.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America