Assalam-O-Alaikum Mufti Saheb,
Kindly advice me in this situation.
Due to over expenses and I have to use my credit cards and I couldn’t pay on time. The total amount is quite high and I couldn’t pay at once. I have decided to send my family back and clear all the card dues and would like to repent for this. I have Islamic credit cards and conventional as well. It may take at least one year to clear all the debts. In case if my total debt is 50,000 then if I pay monthly I can manage to pay 4000-5000 monthly. The monthly excess amount as banks have 2% monthly and 20-24% yearly in form profit in case if Islamic bank or interest in conventional bank. I may have to pay app 1000-1400 as excess amount monthly and will be reduced monthly as I clear the payments. In 12 month I am expecting 8000-9000 as excess amount.
I have another option, Noor Islamic bank is offering me Islamic personal loans. Any how I am not satisfied with Islamic loan and most scholar doesn’t agree as well. My purpose for Islamic loan will be get rid of this loans ASAP and if I take from Islamic personal loan then the profit rate is 3-4% yearly. If I take 50,000 and clear all my pending credit. The excess in form of profit will be 2000-3000 depending on profit rate for the whole loan.
1. Please advice if I can take Islamic personal loan.
2. If I am allowed to take Islamic loan can I take little extra amount to have my car repair as well or I should take only the equivalent amount of pending credit card payments.
The answer to your question "Can I take Islamic loan" really depends on the terms and structure of the Islamic loan. If the terms of your loan agreement are in accordance with the Islamic teachings then it will be lawful. Otherwise it would not be lawful. Furthermore, if you can not find any pure lawful option to pay off your debt and you are able to reduce the amount of interest that you will pay in total by taking out a new loan which is either no interest preferrably or very low interest then you may go with that option in order to get rid of the loans as soon as possible.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America