Local banks, such as the National Bank and Al-Rajhi, have begun purchasing cars on installment for those who wish, as follows:

The questioner : The questioner says: Local banks, such as the National Bank and Al-Rajhi, have begun purchasing cars on installment for those who wish, as follows: A man comes to the bank and requests a specific type of car, its value is determined, and it is purchased with a markup, for example, eighty percent or ten percent. The matter has also expanded beyond cars to the point where they purchase furniture and install it for him, and even purchase a house for him and install the amount as follows: If the amount is, for example, one hundred and fifty thousand, it is calculated for the person as one hundred and eighty thousand?

The Shaykh : First, I do not wish for a person’s name, a company, or anything else to be mentioned. The question must be general, not specific; I completely reject it. If not for the expected benefit of the answer to this question, I would have ignored answering it. So be careful, my brother, in presenting a question to me that mentions a person; absolutely not, never say “like so and so” or “like so and so.” We do not accept this at all. The intent is the ruling and the action, not the person. So we omit the names of the persons specified by the questioner. We say: If a man needed a car and went to a merchant and said, “I need such-and-such a car, its value is twenty thousand, and I do not have twenty thousand,” and the merchant said, “I will buy it for you, but I will install it for you,” and the merchant went and bought it from the showroom for twenty thousand, then sold it to the one who specified it to him for twenty-five thousand. I say this transaction is forbidden and not permissible, and it is a stratagem to circumvent riba, because its reality is that the merchant lent you the value of this car with what? With a markup. And circumventing riba does not turn it into a lawful sale, and circumventing the prohibitions of Allah does not turn them into lawful, but rather it increases their impurity upon their impurity. For this reason, it is reported from the Prophet (peace and blessings be upon him) that he said: The stratagem that the Jews used when Allah forbade them the fats, the fats of carrion, what did they do? They began to melt the fat, then sell it and eat the price, and they said, “We did not eat the fat.” Then the Prophet (peace and blessings be upon him) said: And this man who came to the merchant and specified the car, saying, “I want such-and-such a car,” and the merchant went and bought it, then sold it to him for a higher price, there is no doubt that it is closer to circumventing the prohibitions of Allah than melting the fat and then selling it and eating its price, because it is a close stratagem. What is the intermediary between the merchant giving him twenty thousand and taking from him twenty-five? What is the means? Only the car. That is to say, the reality is dirhams for dirhams, with a car entering between them, as Ibn Abbas said: “Dirhams for dirhams, with a silk garment entering between them”. Also, some people who are building, for example, a building or a house that needs materials like iron and cement, come to the merchant and say, “I do not have iron or cement.” He says, “I will buy it. How much do you want?” He says, “I want ten tons of iron and one hundred bags of cement.” Let us assume the value is ten thousand cash. The merchant goes and buys it for ten thousand cash from the showroom, then sells it to him for fifteen thousand on installment. This is dirhams for dirhams, with these goods entering between them. But if we assume that these items are in the possession of the merchant, meaning he has cars, and a person comes to him and says, “I want you to sell me this car,” he says, “Okay, this car is twenty thousand cash, or twenty-five thousand on installment.” He says, “I will take it for twenty-five thousand on installment,” and the price is fixed at twenty-five thousand on installment. Then there is no harm in this, because it is a sale and purchase; he bought a car for a known, fixed amount of dirhams with no ambiguity. Similarly, if he came to a person who has iron and cement and said, “I sell this iron for such-and-such cash per ton, and I sell it on installment for such-and-such plus,” and he took it on installment, then this is permissible and not forbidden? This is permissible because the man owns the iron, and there is no riba between the iron and the dirhams. Similarly, if he said, “I will take the cement on installment for a higher price,” there is no harm, because there is no riba between the cement and the dirhams. So we say to these merchants: If they say to us, “You have restricted us,” we say, there is no restriction. Buy what people need in large quantities, buy it and display it for sale, and sell to those who come to you cash for a lower price than if you sold it to them on installment. And in that case, we are safe from riba or from circumventing riba, and the sale becomes lawful.