What is the ruling on installment sales? What is the ruling on commodity murabaha (tawarruq)? And is it permissible to waive part of the money in exchange for accelerating the price after it was deferred?
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The questioner : The honorable Shaykh, regarding installment sales or deferred payment, for example, if one owns a car. This is the first part.
And the second part: If the buyer wants to pay the remaining value after a year or after a period, is something taken from him in addition to this period?
The Shaykh : Yes, meaning he is asking two questions. The first question: Is it permissible to sell a commodity for a deferred price in installments, where a certain amount of the price becomes due each year? This is permissible and there is no harm in it, based on the general statement of Allah the Exalted:[Al-Baqarah 2:282] However, the commodity must be in the possession of the seller.
And secondly: The buyer must intend to take the commodity itself to benefit from it, whether deferred or not. But if he intends to buy the commodity to sell it and take its price to benefit from it, this is a matter called by scholars the issue of tawarruq. There is disagreement among scholars regarding its permissibility. Shaykh al-Islam Ibn Taymiyyah and a group of scholars say: This is forbidden because it is a stratagem to sell dirhams for dirhams by introducing this commodity. Some of them said: It is permissible on the condition that there is a need and he cannot find anyone to lend to him.
The second part of the question: If the one who bought it for a deferred price, with a certain amount due each year, wants to pay the price in cash in the first year, for example, is the price reduced for him in exchange for accelerating it, or not? We say: This is also a matter of disagreement among scholars. Some scholars say: It is not valid to waive anything from the deferred amount because it is exchanging part of his wealth for part of it.
And the correct view is that it is permissible. That is: It is permissible for the one who has a deferred debt to agree with the owner of the debt that he will pay it in full with a waiver of an amount corresponding to the remaining period.
And the second part: If the buyer wants to pay the remaining value after a year or after a period, is something taken from him in addition to this period?
The Shaykh : Yes, meaning he is asking two questions. The first question: Is it permissible to sell a commodity for a deferred price in installments, where a certain amount of the price becomes due each year? This is permissible and there is no harm in it, based on the general statement of Allah the Exalted:
O you who have believed, when you contract a debt for a specified term, write it down.
يَا أَيُّهَا الَّذِينَ آمَنُوا إِذَا تَدَايَنْتُمْ بِدَيْنٍ إِلَى أَجَلٍ مُسَمّىً فَاكْتُبُوهُAnd secondly: The buyer must intend to take the commodity itself to benefit from it, whether deferred or not. But if he intends to buy the commodity to sell it and take its price to benefit from it, this is a matter called by scholars the issue of tawarruq. There is disagreement among scholars regarding its permissibility. Shaykh al-Islam Ibn Taymiyyah and a group of scholars say: This is forbidden because it is a stratagem to sell dirhams for dirhams by introducing this commodity. Some of them said: It is permissible on the condition that there is a need and he cannot find anyone to lend to him.
The second part of the question: If the one who bought it for a deferred price, with a certain amount due each year, wants to pay the price in cash in the first year, for example, is the price reduced for him in exchange for accelerating it, or not? We say: This is also a matter of disagreement among scholars. Some scholars say: It is not valid to waive anything from the deferred amount because it is exchanging part of his wealth for part of it.
And the correct view is that it is permissible. That is: It is permissible for the one who has a deferred debt to agree with the owner of the debt that he will pay it in full with a waiver of an amount corresponding to the remaining period.