Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states: “If the transaction is totally free of any interest, then it is considered permissible, even though you are paying a higher price than you would normally do if paying the price in cash at the time of possessing your vehicle. So essentially it is a question of negotiating with the dealer to buy it at a higher price without involving any interest; the increase in price is allowed because of the deferred payment. As Imam Ibn Taymiyyah has pointed out, according to the consensus of scholars belonging to all of the four schools of jurisprudence, we are allowed to purchase a commodity at a higher price with a delayed payment. The conditions to be observed for its validity are that the commodity price and the time of payment should be known to the parties of the transaction.
This permission is a sign of the ease and latitude in the Shari`ah in order to facilitate human life. Allah says, “He has not appointed for you any hardship in (this) religion.” (Al-Hajj: 78).
So there is no reason to consider the above transaction as unlawful so long as it is free of any mention of interest. May Allah make us all self-sufficient with what is halal for us so that we do not need to resort to haram.”