The Ruling on the Issue of Tawarruq
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There is a man who bought a car for another man and sold it to him in many installments, increasing the price for a known amount?
For example: A person came to a merchant and said: I want such-and-such a car. So the merchant went and bought it from the showroom for fifty thousand riyals—for example—then sold it to this man for sixty thousand riyals.We say: This is a ruse to circumvent riba (usury or interest);Because the merchant, instead of saying: You lent him its value for fifty thousand riyals on the condition that he returns to you sixty thousand riyals at a specified time. The merchant went to buy this car with a purchase that was not intended; because he did not buy it except for this man; so this is not permissible. But if the car was with the merchant and he had bought it for fifty thousand, and this man came and said: Sell it to me for sixty thousand at a specified time, then there is nothing wrong with that.
For example: A person came to a merchant and said: I want such-and-such a car. So the merchant went and bought it from the showroom for fifty thousand riyals—for example—then sold it to this man for sixty thousand riyals.We say: This is a ruse to circumvent riba (usury or interest);Because the merchant, instead of saying: You lent him its value for fifty thousand riyals on the condition that he returns to you sixty thousand riyals at a specified time. The merchant went to buy this car with a purchase that was not intended; because he did not buy it except for this man; so this is not permissible. But if the car was with the merchant and he had bought it for fifty thousand, and this man came and said: Sell it to me for sixty thousand at a specified time, then there is nothing wrong with that.