Paying an amount on behalf of the buyer to receive more than that amount after the credit period
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Fatwa number ( 10612 )
Q: I am a government employee and I have ample funds. If any person wants to buy anything, whether electrical appliances, household furniture, or sanitary ware (porcelain and its accessories), he comes to me and we go together to the shop (store). He pays an advance of the basic price of the item according to our agreement with him, which is a quarter of the value of the item. Then I immediately pay
the seller the remaining price, and he takes the goods. He then pays me the remainder in installments over 24 months, in exchange for an increase of 25% of the remaining price, without calculating the advance already paid. Example: Goods priced at 100 Egyptian pounds in the store; he pays a quarter, meaning 25 pounds, and the remainder becomes 75 pounds. 25% is calculated on this for my waiting period of 24 months, making the total value of the goods 118 pounds and 750 milliemes. Is this considered a type of riba (usury or interest), or what? And what is the correct Sharia-compliant path that I must follow in dealing with people who do not have the full cash price of the goods? And if there are goods in a store whose price is higher when paid in installments than when paid in cash, is this increase considered riba (usury or interest)? Knowing that the store owner will wait and give the buyer a period of time, for example, about 24 months or more or less.
A: If the matter is as you described, it is riba (usury or interest); because you paid 75 pounds on his behalf to the seller to receive 118.750 in exchange for it. The sound path is that you buy the item for yourself, take possession of it, and then sell it on credit for more than what you bought it for. If a defect appears in it, the buyer’s recourse is against you; because you are the seller, unlike the first scenario, in which you are not a seller, but rather you paid an amount on behalf of the buyer to receive more than that amount after the credit period.
Q: I am a government employee and I have ample funds. If any person wants to buy anything, whether electrical appliances, household furniture, or sanitary ware (porcelain and its accessories), he comes to me and we go together to the shop (store). He pays an advance of the basic price of the item according to our agreement with him, which is a quarter of the value of the item. Then I immediately pay
the seller the remaining price, and he takes the goods. He then pays me the remainder in installments over 24 months, in exchange for an increase of 25% of the remaining price, without calculating the advance already paid. Example: Goods priced at 100 Egyptian pounds in the store; he pays a quarter, meaning 25 pounds, and the remainder becomes 75 pounds. 25% is calculated on this for my waiting period of 24 months, making the total value of the goods 118 pounds and 750 milliemes. Is this considered a type of riba (usury or interest), or what? And what is the correct Sharia-compliant path that I must follow in dealing with people who do not have the full cash price of the goods? And if there are goods in a store whose price is higher when paid in installments than when paid in cash, is this increase considered riba (usury or interest)? Knowing that the store owner will wait and give the buyer a period of time, for example, about 24 months or more or less.
A: If the matter is as you described, it is riba (usury or interest); because you paid 75 pounds on his behalf to the seller to receive 118.750 in exchange for it. The sound path is that you buy the item for yourself, take possession of it, and then sell it on credit for more than what you bought it for. If a defect appears in it, the buyer’s recourse is against you; because you are the seller, unlike the first scenario, in which you are not a seller, but rather you paid an amount on behalf of the buyer to receive more than that amount after the credit period.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.