What is the ruling on contracts of promise to buy and installment purchases?
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The questioner : Shaykh, from this perspective, what about the contracts now called "promise to buy"?
The Shaykh : Anything that is a ruse to obtain riba falls under this, by whatever means. If Shaykh al-Islam (may Allah have mercy on him), and what a man he was in knowledge, jurisprudence, and religion, says: "If you buy the item from its owner for a price higher than the cash price, and you are seeking the money, it is haram and riba," how does this apply to a case where the lender does not own the item, it is not with him, it is not in his possession, and he has no intention of ever buying it?! In fact, I have heard that some people are bold enough to buy an item and then bring it to the merchant, saying: "I bought such-and-such for so much, and I don't have the money now." The merchant says: "I will pay it off for you; I will convert it to installments for you," even though the first person has already bought it.
The questioner : If he buys a car, Shaykh, because he has a debt.
The Shaykh : It is the same thing if he buys a car and has a debt.
The questioner : He bought it for forty and sold it for thirty.
The Shaykh : I say: If he buys a car and has a debt in the manner we mentioned first, he goes to the merchant and says: "I want such-and-such item." This is the same thing. And if he buys it while it is with the merchant, buying it specifically to settle his debt, this falls under the issue of tawarruq, which Shaykh al-Islam Ibn Taymiyyah (may Allah have mercy on him) forbade. If a person is unable to pay, he should not take on debt to pay it off.
The questioner : He does not sell it to other people.
The Shaykh : For example, he bought it for thirty thousand, and it is worth twenty-five thousand.
The questioner : From the car company.
The Shaykh : He bought it from the car company for thirty thousand, and it is worth twenty-five thousand.
The questioner : No, he bought it for thirty, and it is worth thirty, but he sold it for less.
The Shaykh : Whatever they give him, whatever they give him.
The questioner : He took it on installments for forty.
The Shaykh : Okay, this is good; this is our issue.
The questioner : And he went and sold it for cash for twenty-five.
The Shaykh : I say: This is our issue. I say: This is a mistake. Even if it were permissible by the Shari'ah, it is foolishness by reason, because if he commits to this method and the second year comes and he has no money.
The questioner : He is committed to this method, and he is in debt, Shaykh. This is one I know.
The Shaykh : That is it; he must be advised. He said: "If you are poor, you are poor."
The questioner : I mean, Shaykh, in some tribes, the marriage cost reaches one hundred and fifty thousand, so he does these maneuvers?
The Shaykh : This is wrong; this is wrong, and this is the problem.
The questioner : And what is its ruling by the Shari'ah, Shaykh?
The Shaykh : Its ruling, as I told you, if a person buys the item for the sake of the money, it is haram according to Shaykh al-Islam Ibn Taymiyyah. He says: "This is a ruse to obtain riba, and it is a form of 'inah, from which the Messenger (peace and blessings be upon him) warned."
The Shaykh : Anything that is a ruse to obtain riba falls under this, by whatever means. If Shaykh al-Islam (may Allah have mercy on him), and what a man he was in knowledge, jurisprudence, and religion, says: "If you buy the item from its owner for a price higher than the cash price, and you are seeking the money, it is haram and riba," how does this apply to a case where the lender does not own the item, it is not with him, it is not in his possession, and he has no intention of ever buying it?! In fact, I have heard that some people are bold enough to buy an item and then bring it to the merchant, saying: "I bought such-and-such for so much, and I don't have the money now." The merchant says: "I will pay it off for you; I will convert it to installments for you," even though the first person has already bought it.
The questioner : If he buys a car, Shaykh, because he has a debt.
The Shaykh : It is the same thing if he buys a car and has a debt.
The questioner : He bought it for forty and sold it for thirty.
The Shaykh : I say: If he buys a car and has a debt in the manner we mentioned first, he goes to the merchant and says: "I want such-and-such item." This is the same thing. And if he buys it while it is with the merchant, buying it specifically to settle his debt, this falls under the issue of tawarruq, which Shaykh al-Islam Ibn Taymiyyah (may Allah have mercy on him) forbade. If a person is unable to pay, he should not take on debt to pay it off.
The questioner : He does not sell it to other people.
The Shaykh : For example, he bought it for thirty thousand, and it is worth twenty-five thousand.
The questioner : From the car company.
The Shaykh : He bought it from the car company for thirty thousand, and it is worth twenty-five thousand.
The questioner : No, he bought it for thirty, and it is worth thirty, but he sold it for less.
The Shaykh : Whatever they give him, whatever they give him.
The questioner : He took it on installments for forty.
The Shaykh : Okay, this is good; this is our issue.
The questioner : And he went and sold it for cash for twenty-five.
The Shaykh : I say: This is our issue. I say: This is a mistake. Even if it were permissible by the Shari'ah, it is foolishness by reason, because if he commits to this method and the second year comes and he has no money.
The questioner : He is committed to this method, and he is in debt, Shaykh. This is one I know.
The Shaykh : That is it; he must be advised. He said: "If you are poor, you are poor."
The questioner : I mean, Shaykh, in some tribes, the marriage cost reaches one hundred and fifty thousand, so he does these maneuvers?
The Shaykh : This is wrong; this is wrong, and this is the problem.
The questioner : And what is its ruling by the Shari'ah, Shaykh?
The Shaykh : Its ruling, as I told you, if a person buys the item for the sake of the money, it is haram according to Shaykh al-Islam Ibn Taymiyyah. He says: "This is a ruse to obtain riba, and it is a form of 'inah, from which the Messenger (peace and blessings be upon him) warned."