I want to buy a car from Al-Rajhi Company on installments, but they do not have this car in stock; however, they will buy it for me. What is the ruling?
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The questioner : The honorable Shaykh, I submitted an application to Al-Rajhi Company for installment payment to buy a car. They informed me of the installment amount and the down payment, and told me that if the car is not available, they will buy it and then sell it to me on installments. They also stated that if I change my mind, I have the right to withdraw from the purchase.
However, after a period, they informed me that the car was finished, meaning it seemed they had bought it. I asked them if it had been registered in the company's name, and they said no; rather, I just need to come and take its papers and register it in my name with the traffic department. They also told me that the car may have arrived at the showroom, or that they are dealing with it, or that it may have arrived, meaning the car had not yet arrived. I do not know if this method is lawful or not, and what is the lawful method?
The Shaykh : Yes, first, if the car is not with the seller, but he sells you a car on the basis that he will buy it for you and then sell it to you, this is forbidden and not permissible, unless he sells it to you at its capital cost, in which case there is no harm, because there is no riba (usury or interest) if he sells it at its capital cost. But if he sells it to you with a profit, then this profit is riba. However, it is not explicit riba, but rather riba wrapped in the form of a contract that is not intended. The seller did not intend to buy it himself from the start; rather, he intended to buy it for you. It is like lending you the amount with a profit, or like lending you the amount with an increase, and this is riba itself.
As for if the item is available with the seller, and he says, "This car is currently being sold for forty thousand cash. If you want it on installments, I will sell it to you for fifty thousand," and you accept, then there is no harm. Yes, there is no harm if your intention is the car. But if your intention is the money of the car, meaning you take it and want to sell it, this is a matter the scholars call the issue of tawarruq (a commodity sale used to obtain cash). There is disagreement among the scholars on this; some permit it, and some say it is not permissible. But if it is not available with them, it is forbidden and not permissible, because it is selling what one does not own, and because buying it is a formal purchase that is not intended; rather, what is intended is the riba they take.
The evidence for this is also what you mentioned: they say, "We will write it in your name from the showroom; we will not write it in our name." This is very clear that they did not want it. Even if the seller writes it in his name and then transfers it to you, it is the same thing. As for some saying, "I do not bind you to the car; if you wish, leave it," this is empty talk, because the man did not come saying, "I want such-and-such car," and he intends to withdraw. If it happens that one in a thousand withdraws, that is nothing; it does not prevent the ruling.
So, what we see is that this method is forbidden and not permissible. If you want an alternative, go to a car dealer who has cars and say to him, "I want you to sell me this car for fifty thousand on installments, and I will bring you a guarantor who will pay you the price when the due date arrives. If you wish, you may also take the car as a pledge." And by this, you are safe. Yes.
The questioner : ... the lawful method, until it reaches him
The Shaykh : This is the lawful method
The questioner : ... until it reaches him
The Shaykh : There is no lawful method except this. If they have it, you say, "I bought from you such-and-such car for such-and-such amount on installments, one thousand riyals per month, two thousand riyals per month, according to what you agree upon." Yes.
The questioner : May Allah reward you with good
The Shaykh : May Allah bless you.
However, after a period, they informed me that the car was finished, meaning it seemed they had bought it. I asked them if it had been registered in the company's name, and they said no; rather, I just need to come and take its papers and register it in my name with the traffic department. They also told me that the car may have arrived at the showroom, or that they are dealing with it, or that it may have arrived, meaning the car had not yet arrived. I do not know if this method is lawful or not, and what is the lawful method?
The Shaykh : Yes, first, if the car is not with the seller, but he sells you a car on the basis that he will buy it for you and then sell it to you, this is forbidden and not permissible, unless he sells it to you at its capital cost, in which case there is no harm, because there is no riba (usury or interest) if he sells it at its capital cost. But if he sells it to you with a profit, then this profit is riba. However, it is not explicit riba, but rather riba wrapped in the form of a contract that is not intended. The seller did not intend to buy it himself from the start; rather, he intended to buy it for you. It is like lending you the amount with a profit, or like lending you the amount with an increase, and this is riba itself.
As for if the item is available with the seller, and he says, "This car is currently being sold for forty thousand cash. If you want it on installments, I will sell it to you for fifty thousand," and you accept, then there is no harm. Yes, there is no harm if your intention is the car. But if your intention is the money of the car, meaning you take it and want to sell it, this is a matter the scholars call the issue of tawarruq (a commodity sale used to obtain cash). There is disagreement among the scholars on this; some permit it, and some say it is not permissible. But if it is not available with them, it is forbidden and not permissible, because it is selling what one does not own, and because buying it is a formal purchase that is not intended; rather, what is intended is the riba they take.
The evidence for this is also what you mentioned: they say, "We will write it in your name from the showroom; we will not write it in our name." This is very clear that they did not want it. Even if the seller writes it in his name and then transfers it to you, it is the same thing. As for some saying, "I do not bind you to the car; if you wish, leave it," this is empty talk, because the man did not come saying, "I want such-and-such car," and he intends to withdraw. If it happens that one in a thousand withdraws, that is nothing; it does not prevent the ruling.
So, what we see is that this method is forbidden and not permissible. If you want an alternative, go to a car dealer who has cars and say to him, "I want you to sell me this car for fifty thousand on installments, and I will bring you a guarantor who will pay you the price when the due date arrives. If you wish, you may also take the car as a pledge." And by this, you are safe. Yes.
The questioner : ... the lawful method, until it reaches him
The Shaykh : This is the lawful method
The questioner : ... until it reaches him
The Shaykh : There is no lawful method except this. If they have it, you say, "I bought from you such-and-such car for such-and-such amount on installments, one thousand riyals per month, two thousand riyals per month, according to what you agree upon." Yes.
The questioner : May Allah reward you with good
The Shaykh : May Allah bless you.