What is the ruling on the issue of tawarruq (a commodity sale used to obtain cash) and buying a car on installments and then selling it?

The questioner : A man wants to borrow money, so he asked a person, saying, "Give me a car, then you sell it, and you take the money, and the car is on installment for you."

The Shaykh : This issue is called by the scholars the issue of tawarruq (a commodity sale used to obtain cash), and the scholars have differed on its permissibility. Shaykh al-Islam Ibn Taymiyyah prohibited it, saying that tawarruq is not permissible. He described it as a person in need coming to another man and saying, for example, "Sell me this car, which is worth fifteen thousand, for twenty thousand over a period of one year," so that the one who bought it can sell it and benefit from the money. Shaykh al-Islam said this is forbidden (haram) and a stratagem to circumvent riba (usury or interest). His student Ibn al-Qayyim mentioned in *Al-A'lam al-Muqin* that our Shaykh would repeatedly review this issue and say that it is forbidden. He also reported from 'Umar ibn 'Abd al-'Aziz (may Allah have mercy on him) that he mentioned it is the sister of riba or the root of riba. Based on this, it is forbidden. However, some scholars granted a dispensation (rukhsah) for it if it is free from anything resembling riba, such as giving him the car for fifteen thousand when it is worth ten thousand, for one or two years, without agreeing that the ten thousand becomes eleven thousand, fifteen thousand, or the like. But the problem is that some people now, may Allah protect us, have become like the Jews who circumvent the prohibitions of Allah with the slightest stratagems. The poor man comes to this rich man and says, "I want a hundred thousand from you; the ten percent is eleven, or twelve, or thirteen, or whatever they agree on." He says, "I want a hundred thousand from you, the ten percent is such and such." Then he goes to a shop owner who has goods, and the creditor buys them in a nominal, not real, purchase. The evidence for this is that he does not turn over the goods, does not look at them, and does not know if there is a defect in them or not. Perhaps they are bags of cardamom that have been eaten by weevils and they do not know. In fact, I believe if the shop owner brought bags of sand, stacked some on top of others, and said, "These are bags of sugar," and sold them to the creditor, and then the creditor sold them to the debtor, the matter would be complete, because they do not turn them over, do not look at them, and do not know what they are. Their intention, may Allah protect us, is to circumvent riba with this nominal sale, which neither the seller, the creditor, nor the debtor intended. Therefore, when the debtor buys it from the creditor, and the heat of his profit burns him, he goes to sell it to the shop owner for less than the principal. This is undoubtedly a stratagem and it is forbidden. For this reason, Shaykh al-Islam Ibn Taymiyyah (may Allah have mercy on him), in *Majmu' al-Fatawa*, when he mentioned this scenario, said that it is forbidden without doubt, and he called it the triple stratagem. And when he mentioned the issue of tawarruq that we mentioned before, he said that there is a difference in it. This indicates that regarding this last issue, there is no disagreement among scholars on its prohibition, because it is an obvious and clear stratagem. I ask you, by Allah, which is closer to circumventing the forbidden: this nominal sale, or what the Jews did when Allah prohibited them from the fat of carrion, so they melted it, then sold it and ate its price? Which is closer? Undoubtedly, this stratagem that some people do now is closer to the Jews' circumvention of the prohibitions of Allah. Thus, these people fall into what the Prophet (peace and blessings be upon him) warned against. He said: stratagems. And I say that this stratagem is uglier than what the bank owners do, who give clear dirhams for clear profit, giving a thousand for a thousand and one hundred, for example. This is clear, obvious, and forbidden riba, and its doer is cursed. But you find the doer of it has humility and shame before his Lord. Those who use stratagems, may Allah protect us, do it as if it is a permissible matter, that they deceive whom the Exalted knows, and you, O creditor, know, and the debtor knows, and the shop owner knows that this sale is not intended. Therefore, you find these bags of cardamom, rice, raw rubber, or others remain with the shop owner for years, and he sells them in one day, or even in one period of the day, he sells them several times, because they are not sold in a real sale. This is a serious matter, may Allah protect us. It may lead to many evils and great trials that Allah (Blessed and Exalted is He) places in His servants through these forbidden matters by which they circumvent the prohibitions of Allah.