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Buying a car with installments

Question:

If a car dealership in Israel gives you the choice to either buy a car for a certain price and pay immediately, or buy it for a higher price and pay slowly(down payment with smaller installments), is the latter ribit deRabanan? (The company’s bank covers the price of the car and expect to be paid this certain amount; the company more specifically is Hyundai, do they also function with heter Iska? Do they have to?)
Thanks

Answer:

If you will pay the up front price then everything is fine, however if you take the second option, you are paying ribbis for the extension of time, and since it is a sale it is ribbis d’rabbonon. Having said that, you would need a Heter Iska. The question would then be with whom do you make the Heter Iska. If the payments are with what is called in Israel “credit”, that is when you are paying the interest to the credit card company, and they have a heter iska. If you are borrowing the money from the bank, or if you fill out a form that instructs the bank to pay for the car, then you would need a Heter Iska with the bank, and the banks in Israel have a Heter Iska. However if the payments are not done this way, then make sure that the dealer has a valid Heter Iska. They can make it legally and easily by calling 053-311-0820 ext. 7. This is the Bais Din of R’ Vind shlit”a, which deals extensively with Hilchos Ribbis, and this extension specializes in making Heter Iska for companies.

Best wishes

Sources:

Y:D 173-1,3

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