Salaam everyone,
I was wondering if anyone knew of any halal loans for cars in the USA?
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Welcome @Amney14! There’s a company called Lariba in the US that supposedly offers shariah compliant auto loans but I personally don’t have any experience using their services.
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I called them a few months ago and mentioned they don’t do it anymore. It’s been difficult to find halal alternatives for Tesla financing.
Most of the OEM dealerships offer halal financing options i.e. GM Finance, Honda Finance etc…
If you buy a Toyota and get financing from Toyota Finance it is Halal as it is the manufacturer of the product that is selling you their product on a lease/finance term i.e. renting as they retain ownership until fully paid. They are “not” lending you money for money, rather “they are” giving you a car in return for money.
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Yeah I’ve heard of that before but since I was interested in the Tesla Model 3 … they don’t offer 0% apr.
it does not have to be zero % … even 22% is halal. the % is only a reference to a unit of measurement. what is haram is like for like, not the calcuation expression.
Salam alaykum
I am not following. Can you expand? These companies state that they are charging a % apr for the purchase of a car. Is that no interest?
In math, there are expressions used to identify growth.
- for growth it can be annual % growth, compound annual groth rate %
If you are speaking about money, they add words such as interst and APR to reflect the growth is related to monetary value. This monetary value can be the growth of money or it can be the growth your realize on your house expressed in monetary term. The former is haram and the latter is halal. If you are speaking about a virsus multiplying, you use the same caluculation but drop APR and interst to refernce the same growth as non monetary.
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Do you have any fatwa from ulama?
Totally incorrect. All the OEM have finance subsidiary who manage their auto loans. One you buy the car, the note is held by the finance arm. For example, Toyota Financial Services, GM finance, etc.
-former auto maker employee
Rather, if you really needed to tap into your 401k for a general purpose loan and pay yourself back with “interest” as per IRS rule. Again it’s interest to yourself so doesn’t really mean much. Plus, 1-5 year loan that you can pay back early in full without penalty etc.
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Asalamo Alaykum- look into UIF. Search that name in google.
Assalamualaikum, I talked with them, but they said they only give auto finance to Illinois and Michigan residents. Are there any alternatives?
According to gpt answer
The statement you provided is partly reliable, but its reliability depends on how the financing is structured in practice, not just who provides it. Let’s break it down clearly:
When it can be considered Halal:
- If Toyota Finance (or any OEM finance) is truly selling or leasing the car to you directly — meaning the car remains in their ownership until you complete payments, and there’s no interest-based loan involved, then yes, it aligns with Islamic financing (similar to Ijara or Murabaha concepts).
- In that case, they’re not lending money — they’re selling you a product at an agreed markup or renting it until ownership transfers.
When it may not be Halal:
- If Toyota Finance (or GM/Honda Finance, etc.) acts as a financial intermediary that lends you money at an interest rate (even if they’re associated with the manufacturer), then it becomes Riba-based and therefore not Halal.
- Many “manufacturer financing” programs in the U.S. are actually interest-bearing auto loans, even though they carry the manufacturer’s name.
In summary:
- The statement is conditionally reliable — true only if the manufacturer financing is structured as a lease or cost-plus sale (Murabaha), and not an interest-based loan.
- Always verify the contract type. If you see terms like APR (annual percentage rate), interest, or finance charge, then it’s not Halal.
If you’d like, I can help you identify whether a specific Toyota or Honda finance offer meets Islamic financing criteria — you can share the terms or contract details (e.g., mention of interest, ownership transfer clause, etc.).