The ruling on buying a car on installments and selling it to benefit from its value

The questioner : Honorable Shaykh, is it permissible to buy a car on installments and then sell it in the market to benefit from its value for marriage, construction, or otherwise, knowing that the company takes interest in return, and the installment period is two years or more, so the interest is eight percent of the car's original value? Is this permissible or not? Please inform us; may Allah reward you.

The Shaykh : This issue has three forms. The first form is what the questioner mentioned: the first is that a person buys the car intending to benefit from it, using it for himself or renting it out. This is permissible. Even if its value increases, what then? If it is worth fifty thousand cash and he buys it for sixty thousand on installments, there is no harm. Shaykh al-Islam Ibn Taymiyyah said, and this is permissible by consensus; no scholar says it is forbidden. The second form is that he buys the car from the company while it is in its ownership.
But he does not want the car; he wants to buy it, for example, for sixty thousand on installments and sell it for fifty thousand cash. His intention is the money, not the car.
Scholars call this issue the issue of tawarruq (a commodity sale used to obtain cash). There are three opinions among scholars regarding it: one is that it is forbidden, and this is the choice of Shaykh al-Islam Ibn Taymiyyah. It is also narrated from 'Umar ibn 'Abd al-'Aziz (may Allah have mercy on him), the famous caliph. Shaykh al-Islam (may Allah have mercy on him) even classified it as 'inah (a buy-back sale used to disguise a loan), which the Prophet (peace and blessings be upon him) warned against.
However, most scholars hold that it is permissible in cases of need. If a person, for example, needs to get married or complete the construction of his house and does this, it is permissible according to most scholars. The third form is when he goes to a merchant and says, "I want such-and-such a car from such-and-such a showroom." The merchant says, "Yes." The merchant goes and buys it from the showroom for, say, fifty thousand, then sells it to this needy person for sixty thousand on installments. This is forbidden, and there is no doubt about it.
And unfortunately, many people have fallen into this nowadays, but it is forbidden.
Because if you asked the merchant, "What did you intend in this transaction?" he would say, "I intended to earn." It is as if he lent him the value of the car with riba (usury or interest), as if he gave him fifty thousand on the condition that he repay it as sixty thousand on installments. This is a stratagem, and a stratagem can never make the forbidden lawful. Stratagems only increase the ugliness of the forbidden, refuge with Allah. Also included in this is what some farmers are doing now. The government has now given bonds to farmers. A check that is cashed after eight months. This man goes to a bank or a merchant and says, "This check is for eighty thousand, due in eight months. Give me sixty thousand and take the check."
This is forbidden, there is no doubt. Because the holder of the check, how much did he receive? How much? Sixty thousand. And the one who gave him sixty thousand, how much will he take? Eighty thousand. This is clear riba, and it combines riba al-nasi'ah (usury of deferment) and riba al-fadl (usury of excess in a like-for-like exchange). Therefore, one must be cautious of this, and you must warn people of it, and frighten them with Allah (Mighty and Majestic), and say, "This is riba itself." When the Messenger (peace and blessings be upon him) was told, "We take a good sa' (a dry measure of about 3 kg) for two bad sa' of dates," he sighed and said, "Oh, this is the eye of riba, the eye of riba. Do not do it. Return it." This is the speech of the Messenger (peace and blessings be upon him), even though the value of the good sa' and the value of the two bad sa' are the same and not different? They are the same. But despite that, the Prophet (peace and blessings be upon him) made this the eye of riba in the chapter of hand-to-hand exchange. How about this which is deferred with a difference in value? There is no doubt that it is forbidden. It is obligatory for students of knowledge to warn people of this action and say, "Glory be to Allah the Great. You are now launching raids on the banks and saying, 'These are buildings for the war of Allah the Exalted and His Messenger by establishing riba in them,' and then you do it yourselves? Is there no covenant between you and Allah? Will He not destroy you as He destroyed those who dealt in riba? What for? Therefore, it is obligatory to warn against this thing, and it is obligatory for those who took these checks to be cautious of this method. We ask Allah that we do not fall into it. This meeting in this month will be the last meeting until next year, if Allah wills. We ask Allah to give us and you a good life and to let us and you enjoy His obedience. Indeed, He is capable of all things. And all praise is due to Allah, Lord of the worlds, and may Allah send prayers and blessings upon our Prophet Muhammad and upon his family and all his companions."