Car finance

Question

Assalamu Alaikum Wa Rahmatullahi Wa Barakatuh, I would like to ask for a Shariah ruling regarding my vehicle purchase agreement. I purchased a 2026 Hyundai Kona from a Hyundai dealership in Ontario, Canada. The dealership owned the vehicle before the transaction, then sold it to me and transferred ownership of the vehicle to me. At the time of signing the agreement, the price and payments were fixed and agreed upon from the beginning. The dealer also confirmed to me that the agreed payments are fixed and will not change throughout the term. However, the contract shows a rate of 3.99% and also states a Cost of Borrowing of $5,077.32, in addition to showing the principal/amount financed. My question is: Is this transaction considered a permissible installment sale (Bay’ al-Taqsit) at a fixed deferred price, where the additional amount is simply part of the agreed sale price of the vehicle? Or are the 3.99% rate and the $5,077.32 Cost of Borrowing considered interest (riba) charged on a loan? Also, under Ontario/Canadian consumer laws, could the APR and Cost of Borrowing simply be required legal disclosures showing the cost of purchasing the vehicle through installments, or do they indicate that this is actually an interest-bearing loan? I would appreciate a ruling based on the actual structure of the agreement, particularly considering that the dealership owned the vehicle before selling it to me and that the price and payments were agreed upon and fixed when the contract was signed. If necessary, I can provide the complete contract and all its pages for your review. Jazakum Allahu Khairan.

Answer