What is the ruling of the Shari'ah, in your view, regarding dealing by the principle of installments and an increase, as previously explained?
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The questioner : If a person wants to buy a car, for example, from a merchant who tells him: "This car is worth four thousand dinars in cash. If you want to pay in installments, that is possible, but you will pay two hundred dinars each month for twenty-five months," resulting in a difference in the amount from four thousand to five thousand. They say that this transaction is commercial. What is the ruling of the Shari'ah, in your view, regarding dealing by the principle of installments and an increase, as previously explained? We ask for your guidance on this.
The Shaykh : Praise be to Allah, Lord of the worlds, and I send prayers and peace upon our Prophet Muhammad, and upon his family and all his Companions.
The answer to this question is that one must know that the original ruling for all sales is permissibility, except for what the Shari'ah indicates should be prohibited and forbidden, due to the generality of the saying of Allah the Exalted:[Al-Baqarah 2:275] If two men trade with each other, we say that this sale is valid unless there is evidence indicating its prohibition. It is obligatory to follow the evidence. If no evidence is established for its prohibition, it is not permissible for anyone to prevent Allah's servants from their transactions without Allah's permission.
Based on this general rule, we look at the scenario this questioner asked about, where he says: He wants to buy a car worth four thousand dinars for five thousand dinars, deferred for twenty-five months.
We say: This transaction does not contain a religious prohibition. There is no riba, no ambiguity, and no excessive uncertainty in it. Rather, the price is clear and known, the item sold is known, and the term is known. There is no riba, so this transaction is valid. This increase is not an increase of dirhams over dirhams, but an increase in the price of the specific commodity. When I bought this car for five thousand dinars deferred, I did not buy dinars with dinars; rather, I bought a car worth five thousand dinars. If it is permissible for a person to sell a car worth four thousand for five thousand dinars in cash, then selling it deferred for five thousand dinars is even more permissible, because it involves facilitating matters for the buyer. No sane person doubts that people distinguish between the present price and the deferred price, for the present cash price is not like the deferred absent price. It is established in the two Sahihs from the hadith of 'Abdullah ibn 'Abbas (may Allah be pleased with him) that people used to make forward sales of fruits for one or two years, so the Prophet (peace and blessings be upon him) said:Mishkat al-Masabih 2883 The forward sale in this hadith is paying the price in advance and delaying the delivery of the purchased commodity. The farmer comes to him and says: "Give me one hundred dirhams for two hundred sa' of wheat until next year." The farmer takes the price and benefits from it, and when the term arrives, the buyer takes the wheat and disposes of it.
Here we act according to custom and innate disposition, that the price of this wheat delivered later will not be the same as the price of the wheat delivered immediately upon payment of the price. Rather, the wheat in this case, meaning the deferred wheat, will be more than the wheat given upon receipt of the price. If one sa' of wheat is worth two dirhams in cash, it will be worth two dirhams minus a little if the wheat is deferred. This is a matter required by custom and innate disposition. There is no difference between this and the scenario the questioner mentioned, for this is a deferral of the price, and the scenario the questioner mentioned is a deferral of the price.
Some people have thought that this is a case of riba, but this is not correct. It would be a case of riba if he bought the car for four thousand dinars, then returned to the seller and said, "I do not have four thousand dinars, and I want you to wait for me for a year for five thousand dinars." This is undoubtedly riba and is not permissible. However, if the contract for the car was made from the beginning for five thousand dinars deferred, then there is nothing wrong with it.
But the consideration remains: What did the buyer intend with this car, with this purchase? If he intended the car itself, there is no doubt in its permissibility, to the extent that some scholars have reported scholarly consensus on this.
As for if he intends the price of the car, meaning he wants to take the car now and then sell it to benefit from its price, this is the issue of tawarruq, and there is scholarly disagreement among the scholars regarding it. Some scholars have permitted it, looking at the form of the contract, while others have prohibited it, looking at the intention.
But we say: This man who bought the car for the sake of its price, if he sells it back to its seller, this is undoubtedly forbidden. If he sells it for less than what he bought it for, because this is the issue of 'inah, which is an obvious stratagem for riba. That is, if I bought this car from the man for five thousand dinars, then returned and sold it to him for four thousand five hundred in cash, that would be forbidden, because in reality it is dirhams for dirhams, with a car that was not intended entering between them.
But if you sell it to another person, not the one you bought it from, this is the issue of tawarruq, and there is disagreement regarding it, and scrupulousness in avoiding it is better. But if dire necessity calls for it, and you find no one to lend to you and no one to make a forward sale to you, and you are in dire necessity for it, then there is nothing wrong with it, but on the condition that the commodity you bought is the property of the seller and is with him in his place. Then you take it and sell it in another place.
And by this we know that what many people do now: the creditor and the debtor go to another person who has a commodity. The creditor buys it, then sells it to the debtor while it is in its place and has not been moved. Then the debtor sells it to the shop owner or to someone else before moving it. We know that this transaction is forbidden and not permissible, without doubt, because it is from selling commodities in their place, and the Prophet (peace and blessings be upon him) prohibited selling commodities where they are bought until the merchants take them to their homes. And because the stratagem in it is very obvious.
The Shaykh : Praise be to Allah, Lord of the worlds, and I send prayers and peace upon our Prophet Muhammad, and upon his family and all his Companions.
The answer to this question is that one must know that the original ruling for all sales is permissibility, except for what the Shari'ah indicates should be prohibited and forbidden, due to the generality of the saying of Allah the Exalted:
But Allah has permitted trade
وأحل الله البيعBased on this general rule, we look at the scenario this questioner asked about, where he says: He wants to buy a car worth four thousand dinars for five thousand dinars, deferred for twenty-five months.
We say: This transaction does not contain a religious prohibition. There is no riba, no ambiguity, and no excessive uncertainty in it. Rather, the price is clear and known, the item sold is known, and the term is known. There is no riba, so this transaction is valid. This increase is not an increase of dirhams over dirhams, but an increase in the price of the specific commodity. When I bought this car for five thousand dinars deferred, I did not buy dinars with dinars; rather, I bought a car worth five thousand dinars. If it is permissible for a person to sell a car worth four thousand for five thousand dinars in cash, then selling it deferred for five thousand dinars is even more permissible, because it involves facilitating matters for the buyer. No sane person doubts that people distinguish between the present price and the deferred price, for the present cash price is not like the deferred absent price. It is established in the two Sahihs from the hadith of 'Abdullah ibn 'Abbas (may Allah be pleased with him) that people used to make forward sales of fruits for one or two years, so the Prophet (peace and blessings be upon him) said:
Those who pay in advance for anything must do so for a specified measure and weight with a specified time fixed.
من أسف في شيء فليسلف في كيل معلوم ووزن معلوم إلى أجل معلومHere we act according to custom and innate disposition, that the price of this wheat delivered later will not be the same as the price of the wheat delivered immediately upon payment of the price. Rather, the wheat in this case, meaning the deferred wheat, will be more than the wheat given upon receipt of the price. If one sa' of wheat is worth two dirhams in cash, it will be worth two dirhams minus a little if the wheat is deferred. This is a matter required by custom and innate disposition. There is no difference between this and the scenario the questioner mentioned, for this is a deferral of the price, and the scenario the questioner mentioned is a deferral of the price.
Some people have thought that this is a case of riba, but this is not correct. It would be a case of riba if he bought the car for four thousand dinars, then returned to the seller and said, "I do not have four thousand dinars, and I want you to wait for me for a year for five thousand dinars." This is undoubtedly riba and is not permissible. However, if the contract for the car was made from the beginning for five thousand dinars deferred, then there is nothing wrong with it.
But the consideration remains: What did the buyer intend with this car, with this purchase? If he intended the car itself, there is no doubt in its permissibility, to the extent that some scholars have reported scholarly consensus on this.
As for if he intends the price of the car, meaning he wants to take the car now and then sell it to benefit from its price, this is the issue of tawarruq, and there is scholarly disagreement among the scholars regarding it. Some scholars have permitted it, looking at the form of the contract, while others have prohibited it, looking at the intention.
But we say: This man who bought the car for the sake of its price, if he sells it back to its seller, this is undoubtedly forbidden. If he sells it for less than what he bought it for, because this is the issue of 'inah, which is an obvious stratagem for riba. That is, if I bought this car from the man for five thousand dinars, then returned and sold it to him for four thousand five hundred in cash, that would be forbidden, because in reality it is dirhams for dirhams, with a car that was not intended entering between them.
But if you sell it to another person, not the one you bought it from, this is the issue of tawarruq, and there is disagreement regarding it, and scrupulousness in avoiding it is better. But if dire necessity calls for it, and you find no one to lend to you and no one to make a forward sale to you, and you are in dire necessity for it, then there is nothing wrong with it, but on the condition that the commodity you bought is the property of the seller and is with him in his place. Then you take it and sell it in another place.
And by this we know that what many people do now: the creditor and the debtor go to another person who has a commodity. The creditor buys it, then sells it to the debtor while it is in its place and has not been moved. Then the debtor sells it to the shop owner or to someone else before moving it. We know that this transaction is forbidden and not permissible, without doubt, because it is from selling commodities in their place, and the Prophet (peace and blessings be upon him) prohibited selling commodities where they are bought until the merchants take them to their homes. And because the stratagem in it is very obvious.