The Difference Between a Loan and Tawarruq

Question:
The second question. Second, I took a loan from Al-Rajhi Bank. Al-Rajhi gave me a loan a second time at a rate of ten percent, meaning ten thousand, and the amount in hand was six thousand and two hundred. They came to settle the account, and they said it is settled, meaning I said the rate went back to three percent according to the bank system. They said, "No, this is a fixed-amount contract, and I am responsible for paying it off in full in installments between me and them. Is this permissible or not, O Shaykh?" It is clear.

Answer:
My brother, what is a loan? Did they give you dirhams and you return them to them with an increase? That is forbidden and not permissible; rather, you return the amount of dirhams you took from them. But if they sold to you, and people now call the issue of tawarruq a loan, and this is a mistake. This is a sale. If they sold to you a commodity, a house, a car, or other goods for a deferred price, you must take possession of it. They must own it before the contract, then they sell it to you, then you take possession of it, transfer it, and sell it elsewhere to someone else. When the term arrives, you pay them the value between you and them. This is called the issue of tawarruq, and it is a sale, not a loan. Yes.