Do not confuse financing with a loan. Financing has a comodity purchase within it. When we discuss, then normally it is either car-financing or house financing. There is a tangible comodity which is being financed.
Under conventional financing, the bank does not take the risk of taking ownership of the car or the house. Instead they extend you a loan with keeping the lien on the car or the house as the collateral. So their loan is pure interest based.
In islamic model, the loan is by name a loan. But in reality the ownership of the item first comes to the bank/financier who then sells it over to the client charging the profit. Such base mechanism has big consequences on the risk management.
As for the service fee, which is normally charged on transactions then that too, in islamic banking, must be based off some service. It cannot be something out of thin air.
So, if the previous answered showed that we are merely extending a loan in lieu of a return of capital plus a service fee (being the benchmarked profit etc), then I am sorry that is not the case. That WILL be pure riba'. My explanation has to do with financing and not a loan.
Post edited and corrected as requested.
Mufti Saheb is an expert in this field and what I was trying to convey has been articulated better by Mufti Saheb and it is simply this:
Consult Ulama on a case by case basis and learn the details instead of ignorantly dismissing something because your brain is unable to grasp the intricacies of a financial transaction.
Read any classical Islamic text and you will come up with the understanding that Islam is very PRO-BUSINESS and very ANTI-RIBA and it is entirely possible to be both (even in 2018).
A business has to make money so no business will lend you money for nothing! And get this into the deep crevices of your brain:
Ulama may differ on a particular transaction. It is entirely theoretically possible for Mufti Abu Hajira to differ with his own teachers on a particular investment scheme, let alone Mufti Abu Hajira disagreeing with other Ulama and of course vice-versa.
May Allah Ta'ala save us from indulging in Rib'a (Ameen).
lol, why what happened?
We must be doing good work here.
Renting vs buying depends on your individual circumstances and your employment career. In certain sectors, volatility exists and you may be required to move around and thus it makes no sense for you to invest in property because you need to move around. In certain employement fields it makes sense to rent and be flexible
Secondly, also depends on your family. If you have younger children it is relatively easier to move around but as children grow up and get used to friends/school/community it’s hard to uproot them.
So there is no single answer to renting vs buying discussion.
This cannot be undone and I am sure it will be greatly appreciated.