What is the ruling on buying a car when one wants it for a person, then selling it to him on installments with an increase?
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The questioner : The question, O honorable Shaykh.
The Shaykh : Yes.
The questioner : Car installment sales: a car comes to the showroom for the owner of the showroom, then the owner of the showroom sells it to a person, and the person pays for it in installments. Is that okay, O Shaykh?
The Shaykh : Yes.
The questioner : The owner of the car who bought it sells it, then it returns to the owner of the showroom again, O Shaykh. It may return to the owner of the showroom more than once or twice. What is your opinion on this matter, O Shaykh?
The Shaykh : I see, first of all, that this transaction is not permissible. A person comes to the merchant and says: I want a car from you on installments. Then the merchant orders him to go to the showroom and choose whatever car he wishes. Then he returns to the merchant and says: I have chosen such-and-such a car. The merchant buys it from the showroom and then sells it to this person in need. This is forbidden, and there is no doubt that it is a ruse. The merchant, instead of giving this man the value of the car in cash and saying: It is due from you for more, up to a year, there is no difference between this and saying: Go and buy the car for me, then I will sell it to you.
And know that transactions through ruse are more sinful than explicit transactions, because the one who resorts to a ruse to circumvent a prohibition has committed a prohibition and has deceived Islam and imitated the Jews. Indeed, the Prophet (peace and blessings be upon him) said: The example is clear, O people. This is a man who needed a car from a showroom worth fifty thousand riyals. Then he went to the merchant and said: I need a car worth fifty thousand riyals. Lend me fifty thousand in installments, two thousand each month. So he lent him fifty thousand in cash, deferred, two thousand riyals each month. The man bought the car and left. There is no doubt that this is forbidden, because it is dirhams for dirhams with an excess and a delay, meaning the excess is the increase. What is the difference between this scenario and the merchant saying: I will buy the car for you for fifty thousand in cash and give it to the showroom, then I will sell it to you for seventy thousand in installments over three years, for example? What is the difference between the two in appearance? There is no difference in reality. Do not make us play with Allah (Mighty and Majestic). There is no difference at all. Rather, this is more wicked because this is a ruse against riba, while the first is explicit riba. The one who commits explicit riba feels that he has committed a sin and is ashamed of Allah (Mighty and Majestic) and tries to repent. But the one who resorts to a ruse against Allah thinks he is free from what he did, so he does not feel ashamed of Allah (Mighty and Majestic) and continues in what he is doing. There is no difference between the two scenarios, and do not be deceived by the prevalence of this transaction. The prevalence of the transaction is not an argument, because Allah says: [Al-Qasas 28:65] And the Exalted says: [Az-Zukhruf 43:39] So the matter is very clear that it is forbidden, even if some people issue a fatwa that it is permissible, that is an error. The intelligent person knows which is greater: this ruse or the ruse of the Jews, who were forbidden the fats, so they melted them first, then sold them and ate the price? The ruse I mentioned to you is more severe than that ruse, because the Jews did not eat the fat, nor did they sell the fat, but they melted it, then sold it and ate its price.
So, selling in this manner is forbidden and not permissible, even if a person eats camel hooves, he should not engage in this transaction. Yes.
The Shaykh : Yes.
The questioner : Car installment sales: a car comes to the showroom for the owner of the showroom, then the owner of the showroom sells it to a person, and the person pays for it in installments. Is that okay, O Shaykh?
The Shaykh : Yes.
The questioner : The owner of the car who bought it sells it, then it returns to the owner of the showroom again, O Shaykh. It may return to the owner of the showroom more than once or twice. What is your opinion on this matter, O Shaykh?
The Shaykh : I see, first of all, that this transaction is not permissible. A person comes to the merchant and says: I want a car from you on installments. Then the merchant orders him to go to the showroom and choose whatever car he wishes. Then he returns to the merchant and says: I have chosen such-and-such a car. The merchant buys it from the showroom and then sells it to this person in need. This is forbidden, and there is no doubt that it is a ruse. The merchant, instead of giving this man the value of the car in cash and saying: It is due from you for more, up to a year, there is no difference between this and saying: Go and buy the car for me, then I will sell it to you.
And know that transactions through ruse are more sinful than explicit transactions, because the one who resorts to a ruse to circumvent a prohibition has committed a prohibition and has deceived Islam and imitated the Jews. Indeed, the Prophet (peace and blessings be upon him) said:
Do not do what the Jews did, so that you make lawful the prohibitions of Allah by the slightest of ruses
لا ترتكبوا ما ارتكبت اليهود فتستحلوا محارم الله بأدنى الحيلAnd [mention] the Day He will call them and say, "What did you answer the messengers?"
وَيَوْمَ يُنَادِيهِمْ فَيَقُولُ مَاذَا أَجَبْتُمْ الْمُرْسَلِينَAnd never will it benefit you that Day, when you have wronged, that you are [all] sharing in the punishment.
وَلَنْ يَنفَعَكُمْ الْيَوْمَ إِذْ ظَلَمْتُمْ أَنَّكُمْ فِي الْعَذَابِ مُشْتَرِكُونَSo, selling in this manner is forbidden and not permissible, even if a person eats camel hooves, he should not engage in this transaction. Yes.