Details of the Ruling on Installment Sales
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Your Eminence! I and another person paid a sum of money amounting to: three hundred thousand riyals, and we buy new cars and put them in a showroom. Then, when a buyer comes to us, we sell them to him on installment. We heard from the people of the town where we live that they did the same work, and that they sought your fatwa, and that you did not permit this matter?
Yes,First: May Allah reward you! In installment sales, sometimes a person comes to you and says: I want a car,She says: I do not have cars, go to the showroom and choose any car, and I will buy it in my name and transfer the money to the showroom, then I will sell it to you on installment at an increased price. Did you understand this? This is forbidden,There is no problem with it: First: because the lender sold what he does not own.
Second: He did not buy this car except for the sake of riba, which is selling it to him at an increased price, and were it not for the riba, he would not have bought it.If he came and said: May Allah reward you with good, lend me the money and buy the car for me, and I will give it to you later, he did not agree.And the Prophet (peace and blessings be upon him) said: (Actions are by intentions, and every person will have what he intended) This is one point.
Second: The person has cars that are in his possession and have entered his ownership, and he bought them through a valid purchase,People come to him saying: We want you to sell to us on installment,This has three aspects: The first aspect: he wants to buy a car on installment to use it, either for himself or for hire. This is permissible and there is no problem with it.
Second: He buys the car on installment to go to another country to sell it for more.
The debtor who needs the car says: I will buy this car from you on installment for fifty thousand! And it is worth forty thousand, so he takes it from him and then goes to sell it in another country where the price is higher, selling it for fifty thousand cash. This is also permissible; because this is a type of trade.
The third,Or the third scenario: That he buys it from you for the sake of the money, only the money. He buys it from you and immediately goes to sell it, whether he profits or loses; because he wants only the money. This issue is called by the scholars the issue of tawarruq;Some of the scholars said: It is permissible for pressing need. If a person needs it for marriage or building a house or something similar, there is no harm.
And some of the scholars said: It is not permissible absolutely,And among those who said: It is not permissible absolutely: Shaykh al-Islam Ibn Taymiyyah (may Allah have mercy on him),He said: This issue of tawarruq is a ruse; because the buyer, instead of saying give me forty thousand or fifty thousand for a year, says: sell me this car, and he knows, and the seller also knows, that he wants only the money.Shaykh al-Islam says: (Deeds are only by intentions).
But in my view, in this third scenario, there is a detail, and that if a person is in dire necessity and does not find anyone to lend him,Meaning: or to advance him money, and does not find anyone to sell to him via salam, then there is no harm. Did you understand now?The questioner: Yes; but O Shaykh! We buy and pay the money, whether cash or by check, and we put the car in the showroom. Do we continue or do we stop?The Shaykh: Good! You put it in the showroom, I come and buy it from you?The questioner: Any person, for example, who has a desire to buy and sell, and I do not know whether he wants to sell it or wants it for himself, so what is the action?The Shaykh: But if you know that he only wants to buy it from you in order to sell it immediately for the money, then do not sell to him. But if a person comes to you and you do not know whether he wants to use it, or wants to trade with it in another place, or wants to sell it now and take its money, then there is no harm in selling to him. But you know that this man is poor and will not make a profit; but he wants to take it from you and sell it directly. There is no doubt that scrupulousness is to leave this transaction.
The questioner: Good! We leave it, O Shaykh! We leave this whole installment operation?The Shaykh: No, no, if a person comes who needs a car, to work with it, or to go with it to his work, to his school, to his travel, or a person wants to earn his livelihood from it, then sell to him, there is no obstacle.
The questioner: Most buyers buy for the sake of the paper?The Shaykh: If most buyers are like this, then I advise you to leave it, so leave it.
Yes,First: May Allah reward you! In installment sales, sometimes a person comes to you and says: I want a car,She says: I do not have cars, go to the showroom and choose any car, and I will buy it in my name and transfer the money to the showroom, then I will sell it to you on installment at an increased price. Did you understand this? This is forbidden,There is no problem with it: First: because the lender sold what he does not own.
Second: He did not buy this car except for the sake of riba, which is selling it to him at an increased price, and were it not for the riba, he would not have bought it.If he came and said: May Allah reward you with good, lend me the money and buy the car for me, and I will give it to you later, he did not agree.And the Prophet (peace and blessings be upon him) said: (Actions are by intentions, and every person will have what he intended) This is one point.
Second: The person has cars that are in his possession and have entered his ownership, and he bought them through a valid purchase,People come to him saying: We want you to sell to us on installment,This has three aspects: The first aspect: he wants to buy a car on installment to use it, either for himself or for hire. This is permissible and there is no problem with it.
Second: He buys the car on installment to go to another country to sell it for more.
The debtor who needs the car says: I will buy this car from you on installment for fifty thousand! And it is worth forty thousand, so he takes it from him and then goes to sell it in another country where the price is higher, selling it for fifty thousand cash. This is also permissible; because this is a type of trade.
The third,Or the third scenario: That he buys it from you for the sake of the money, only the money. He buys it from you and immediately goes to sell it, whether he profits or loses; because he wants only the money. This issue is called by the scholars the issue of tawarruq;Some of the scholars said: It is permissible for pressing need. If a person needs it for marriage or building a house or something similar, there is no harm.
And some of the scholars said: It is not permissible absolutely,And among those who said: It is not permissible absolutely: Shaykh al-Islam Ibn Taymiyyah (may Allah have mercy on him),He said: This issue of tawarruq is a ruse; because the buyer, instead of saying give me forty thousand or fifty thousand for a year, says: sell me this car, and he knows, and the seller also knows, that he wants only the money.Shaykh al-Islam says: (Deeds are only by intentions).
But in my view, in this third scenario, there is a detail, and that if a person is in dire necessity and does not find anyone to lend him,Meaning: or to advance him money, and does not find anyone to sell to him via salam, then there is no harm. Did you understand now?The questioner: Yes; but O Shaykh! We buy and pay the money, whether cash or by check, and we put the car in the showroom. Do we continue or do we stop?The Shaykh: Good! You put it in the showroom, I come and buy it from you?The questioner: Any person, for example, who has a desire to buy and sell, and I do not know whether he wants to sell it or wants it for himself, so what is the action?The Shaykh: But if you know that he only wants to buy it from you in order to sell it immediately for the money, then do not sell to him. But if a person comes to you and you do not know whether he wants to use it, or wants to trade with it in another place, or wants to sell it now and take its money, then there is no harm in selling to him. But you know that this man is poor and will not make a profit; but he wants to take it from you and sell it directly. There is no doubt that scrupulousness is to leave this transaction.
The questioner: Good! We leave it, O Shaykh! We leave this whole installment operation?The Shaykh: No, no, if a person comes who needs a car, to work with it, or to go with it to his work, to his school, to his travel, or a person wants to earn his livelihood from it, then sell to him, there is no obstacle.
The questioner: Most buyers buy for the sake of the paper?The Shaykh: If most buyers are like this, then I advise you to leave it, so leave it.