The Ruling on Tawarruq (al-Dayinah or al-Gha'ibah)

Question:
May Allah reward you with good, and may He do you well. A listener whose name is indicated by the letters M. A. Hais says: What is the ruling on buying cars and then selling them for the purpose of obtaining their price in cash, and then paying the price in installments after deducting a portion of the price? It is known that this happens frequently with other items used, such as air conditioners and the like. May Allah reward you with good.

Answer:
It appears the questioner is asking about the issue of tawarruq, which is when a person in need of cash buys a commodity on deferred payment in order to sell it immediately and obtain its price. This is the issue of tawarruq, and it is called by the general public the issue of al-dayinah or al-gha'ibah. There is disagreement among the scholars regarding it, and the majority hold that it is permissible due to need and dire necessity, but on the condition that the creditor does not buy it; rather, it is sold to someone else who has no prior agreement or relationship with the first contract, such as selling it in the market. However, if the creditor, who is the one who sold it on deferred payment, buys it, then this is the issue of 'inah, which the Messenger of Allah (peace and blessings be upon him) prohibited, as in the hadith of Ibn 'Umar, because it is a stratagem to reach riba.