What is the ruling on tawarruq?

The Shaykh: Others

The questioner : Regarding the issue of tawarruq, O Shaykh, a man sells a car to another man on credit, and then the first man buys it back from him in the market or from someone else for cash, with the intention of obtaining money?

The Shaykh : If the buyer knows the reality of the purchase, he should not assist him in this, because this resembles the buy-back sale (‘inah). However, it differs from it because the second buyer is a third party who has no connection to the matter. If he is aware of the method of purchase used by the buyer of this merchandise, he is not assisting him in such a purchase. You know that this purchase is based on what is called today installment sales. We grow more faith and conviction every day that installment sales are not permissible and are among the things the Messenger (peace and blessings be upon him) prohibited in more than one hadith. If a buyer purchases merchandise on installments and then turns around to sell what he bought in order to get the cash, he has certainly purchased on installments. Therefore, anyone who is aware of such a purchase is not permitted to buy from him. But if he was not aware, he is not held accountable. However, this buyer, who is the seller, is not permitted to engage in this type of buying and selling. Is that clear? If Allah wills.