The Difference Between Installment Sales and Tawarruq
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The eighth question of Fatwa No. ( 16402 ):
Q8: What is the difference between an installment sale and the issue of tawarruq?
A8: An installment sale is: selling a commodity for a deferred price, to be paid in separate installments. As for the issue of tawarruq, it is that one buys a commodity for a deferred price in order to sell it in the market to someone other than the creditor and benefit from its price. When the due date arrives, he pays the owner the deferred price for which he bought it. The installment sale is permissible, and one should not pay attention to the statement of its impermissibility due to its anomaly and the lack of evidence for it. As for the issue of tawarruq, it is a matter of scholarly disagreement, and the correct view is that it is permissible.
Q8: What is the difference between an installment sale and the issue of tawarruq?
A8: An installment sale is: selling a commodity for a deferred price, to be paid in separate installments. As for the issue of tawarruq, it is that one buys a commodity for a deferred price in order to sell it in the market to someone other than the creditor and benefit from its price. When the due date arrives, he pays the owner the deferred price for which he bought it. The installment sale is permissible, and one should not pay attention to the statement of its impermissibility due to its anomaly and the lack of evidence for it. As for the issue of tawarruq, it is a matter of scholarly disagreement, and the correct view is that it is permissible.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.