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Zakaah while financing a car

Fatwaa ID: 979

Do i need to pay zakah if brought a car on finance?

How would i work it out

In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

We understand that the financing above is Shari’ah compliant and a model which qualifies as debt. If so, you will add up all your zakaatable wealth. Thereafter, you will deduct the amount payable in the next twelve lunar months from the total financing . If the balance after deduction is equal to or more than the nisaab amount, then you will pay zakaah on the balance. If the balance is less than the nisaab, then you will not pay zakaah.

For example, let’s say your zakaatable wealth is worth $20,000. You purchased a car for $23,000 and you paid a $5000 down-payment. That leaves you with $18,000 outstanding, to be paid over 36 months. Thus, your yearly payment will be $6,000. You will only deduct that amount from the $20,000. Accordingly, you will pay zakaah for $14,000, i.e., $350.

If your financing is not Shari’ah compliant or it does not qualify as a debt, then the above will not apply. It should be noted that interest payments are non-deductible.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


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