The issue of installment sales and the clarification that it is one of the condemned ruses in the Shari'ah, and the relationship of this sale to riba.

The Shaykh : This is one of these ruses that has become a natural matter, such that if someone denies it, no one rebukes him. It is called today installment sale, and it is a very strong aid to the aforementioned turning and revolving. If I go to the merchant now and want to buy goods or a car, I negotiate the price of the goods for cash and for installment, and he sells accordingly. I might buy at the installment price, which is higher than the cash price, because I do not have money. Many of the Muslim scholars today permit this... based on this fatwa I mentioned to you regarding the Islamic bank. Instead of the merchant taking this increase for the installment sale... the Islamic bank, they claim, does not take it in this way. So the two thousand that the merchant would have taken, the bank takes instead. Thus, he expands his wealth through the path of trade, they claim. And this sale, in their claim, is not riba.
This is based on the permissibility of installment sale. So what is the reality of this sale? Is it permissible? I say it is permissible and not permissible, and there is no wonder in that, because whoever says it is permissible holds an Islamic opinion, and whoever says it is not permissible holds an Islamic opinion, according to the scholars we referred to. So you take what pleases you. If prohibition suits you, you say it is prohibited; and if you say... and if permissibility suits you, you say it is permissible. It is all an Islamic opinion. As for Islam, you have heard today in... the saying of Allah, Mighty and Majestic: What difference is greater than describing one thing with two contradictory descriptions? As if you describe the time now as day... one says it is day because he sees the light of day... another says no, it is night now because he does not... This is correct and this is correct, two opposites that do not coexist. This is white and another says it is black, both are correct. This means departing from reason, and worse than this is departing from the Shari'ah when you describe a specific issue with two contradictory descriptions, halal and haram, and then you... So what is the reality of installment sale, by the text from which no falsehood comes from before or behind? I will mention to you now two hadiths, and then you may choose what... of the two opinions called Islamic opinions, they claim. Imam Ahmad narrated with his chain, a strong chain, from Abdullah ibn Mas'ud (may Allah be pleased with him) who said: "The Messenger of Allah (peace and blessings be upon him) prohibited two sales in one sale" And in a narration: "two sales in one sale" It was asked of the narrator of the hadith, who was Smaak ibn Harb, what are two sales in one sale? He said: "That you say: 'I sell you this for such-and-such cash, and for such-and-such on credit' This is installment sale. "I sell you this for such-and-such cash" for a dirham cash, "and for such-and-such on credit" for a dirham and a fils, for example. This is installment sale...
The other hadith is narrated by Abu Bakr ibn Abi Shaybah in his Musannaf, and by Imam Abu Dawud in his Sunan with a good chain, from the hadith of Abu Hurayrah (may Allah be pleased with him) who said: The Messenger of Allah (peace and blessings be upon him) said: Al-Wakas is a reduction in weight and meaning. That is, whoever sells with two sales in one sale at two different prices, he is entitled to the lower price, or if he takes the higher price, it is riba. That is, the lower of the two prices... otherwise it is riba.
This riba was named by the Messenger (peace be upon him). Many people do not name it so, but rather they say this is a sale, and both the buyer on installment and the seller are satisfied, so they made that a justification for permitting this opinion. They have their ijtihad, but they said long ago: "When the athar comes, the reasoning is void" "And when the river of Allah comes, the river of Ma'qil is void" So when the hadith comes from the Messenger (peace and blessings be upon him), as the scholars of usul say: "There is no ijtihad in the place of the text".
Installment sale was adopted as a means to feed the issue of the Islamic bank there in Abu Dhabi, as told to me by the one I referred to there in London. And with me was one of our Egyptian-Saudi brothers who was acquainted with the head of the bank there... So we wrote... a warning about this transaction and drew his attention to the fact that since you want to establish a truly Islamic bank, this transaction... due to the saying of the Messenger such-and-such and his saying such-and-such, etc.
So this is an example of what is schemed... regarding riba. How... installment sale and that it is permissible, so I say, were it not that...
This is an example of what is schemed... regarding riba. How... installment sale and that it is permissible, so I say, were it not that the one in charge of this bank heard a fatwa permitting installment sale, he would not have permitted that operation. He is... an intermediary between the buyer and the merchant, so instead of the merchant taking that increase, the bank takes it. He took a fatwa from... but this fatwa was based on completely ignoring the first hadith of Ibn Mas'ud and the other hadith of Abu Hurayrah. This is an issue that allows for... because it may occur to the mind of one who may be knowledgeable in some of the madhahib, some difficulties, which are also answered, but we are dealing with it, except that I seize this opportunity to say that installment sale has been and still is today a cause for Muslims to fall into other prohibited transactions. And it is not the saying of him (peace and blessings be upon him) Allah is the Greatest. This hadith is as if it is the revelation of the hour. The most humiliated of people, we enslaved them and occupied some of our sacred lands. What humiliation is greater than this? ... from Allah ... What is 'inah sale? 'Inah is derived from the word 'ayn, and 'ayn has many meanings as is known to you. One of its meanings is the essence, the essence of the thing, the very thing itself. So he (peace and blessings be upon him) applied this name to a specific transaction and called it 'inah sale. That is the installment sale we mentioned earlier... after the buyer buys the need for a price... on installment... this price is higher than the cash sale. This buyer returns, and for example, twenty thousand has been paid to him, plus two thousand, twenty-two thousand is on him, if that is correct, by a salam sale, for example. The buyer returns... as a seller, and the seller becomes a buyer, and he says to the buyer of the car, which has not yet... from... do you want to buy from me, so-and-so, this car for cash? So they negotiate on it, and the merchant buys it from him for, for example, eighteen thousand, because... when he set the cash price, it must be less than that, so he is buying from him for less than the capital, meaning instead of buying it from him, he would buy it from the factory, for example. The bottom line is they agree, for example, on a price of eighteen thousand, and the merchant pays eighteen thousand cash to this man, the merchant claims, and he departs, and twenty thousand has been recorded on him, plus... two thousand. So the riba is four thousand, perhaps more. No usurer among the Jews in the world gets like this, which they call interest, from such... This, they claim, is halal. Why? Because But the prescribed sale, there are sales... upon him (peace be upon him), for example, he prohibited the sale of gharar, so he... does not know that people are trading with it, but the important thing is to know the ruling of Islam in it: is it halal or haram? He prohibited the sale of gharar, so the sale of gharar is not permissible. Likewise, he prohibited installment sale, as you have learned. Likewise, he prohibited 'inah sale and made it a cause for Allah, Mighty and Majestic, to inflict humiliation on those who permit 'inah sale, 'inah sale, and permit the greed for the world, which he prohibited by his saying (peace be upon him) and you leaned upon the world. And one of the effects of that was that you left jihad in the path of Allah. And what is the consequence of that? So the Islamic bank, if it is based on the correct Islamic fiqh based on the Book and the Sunnah, it is obligatory to realize it, because it is a means for... Muslims from dealing with banks that do not permit or prohibit.