What is the ruling on companies buying a house or car for someone else and then allowing them to pay the amount in installments over several years with an increase in the price?
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The questioner : May Allah forgive you, O Shaykh. Currently, there are some companies that say to anyone: If you want a house or a car anywhere, come and tell us about this car or this house, and we will buy it for you. Then we will let you pay the price of this house in installments. At the same time, they do not oblige you to take what you wanted to buy if they bought it; you have the choice. If you want to buy it or if you want to go back on your word, what is the ruling on this sale? May Allah reward you with good?
The Shaykh : This transaction has spread widely among the people, and in reality, it is not permissible from the Sharia perspective, and it is harmful from the economic perspective:
As for the Sharia perspective, it is known that if you came to me and said, "I want to buy such-and-such a car for fifty thousand riyals, give me fifty thousand riyals, and I will give you sixty thousand riyals after a year," is this matter permissible or not permissible?
The student: Not permissible.
The Shaykh : Not permissible, and there is no doubt about that.
The purchase of this car by the merchant or the company is only for the sake of reaching this ten thousand that was originally not permissible and has now become permissible through this ruse. This is not possible. What is forbidden is forbidden, and resorting to ruses to circumvent it only adds ugliness to it. This is like saying, "Take fifty thousand riyals and buy the car you want, and after a year give me sixty thousand riyals." There is no difference at all, except that the form you mentioned, where they buy it from the showroom and then sell it to you, is merely a ruse. If it were not for you, they would not have bought it, nor would they have thought about buying it. If they knew that you would delay in buying it after they bought it, they would definitely not have bought it for you. If they knew, they would not have given it to you. Therefore, you find that he takes precautions for himself; he goes to inspect the house and see if this house is worth the price or not. The same applies to the car. So he takes complete precautions. Then, if it happens that he bought it and you back out, he puts you on the blacklist and will never deal with you again. Also, the phrase "if he wants to return it, we will accept it" is like throwing dust in people's eyes, as they say, because you do not think that this man who wanted this car or this house or this land, and prepared for the increase, will back out. You do not think he will back out. The man has a purpose in this, and he must buy it. If you counted those who backed out, you would not find one in a thousand. Therefore, we see that this transaction is forbidden, and that it is a ruse to circumvent riba through a nominal purchase that is not intended.
And if the Shaykh al-Islam (may Allah have mercy on him) forbade tawarruq, and other scholars did so, and there is a narration from Imam Ahmad, and tawarruq al-'ayn exists with the seller, then this is more evil and more severe.
And if the Children of Israel, when fats were forbidden to them, said: "We will not eat the fat, but we will melt the fat, sell it, and eat its price," which is closer to the forbidden: this ruse, or the ruse I mentioned?
The ruse I mentioned is closer, because it reaches the forbidden in the first degree. This one does not reach the forbidden except after three degrees. And yet, the Messenger (peace and blessings be upon him) said:Sunan an-Nasa'i 4256Sahih (Darussalam). So this, by Allah, is a ruse to circumvent the forbidden, and I have no doubt about its prohibition. A person who is sincere to himself should stay away from it, even if people issue fatwas for him and he issues fatwas for them. The criterion is the intentions, not the forms. The merchant did not intend from the profit anything but riba, and he did not intend by buying the car anything but riba. Yes, if the car was in his possession, and he sold it to you for more than its price in cash, and you wanted the car itself, or you wanted to make a profit from it by buying it from this country and selling it in another country to make a profit from it, then there is no problem with that, and it is permissible. If you bought it from him while it was in his possession, and you wanted to sell it and take its price, then this is the issue of tawarruq, and there is disagreement among scholars about it. Shaykh al-Islam Ibn Taymiyyah considers it forbidden, and it is a narration from Imam Ahmad.
If someone were to say: "Explicit riba is less severe than the transaction I mentioned," his statement would not be far from the truth, because this combines the ruse and circumventing Allah (Mighty and Majestic) with riba. So the harm of riba is present, and it is the increase that this merchant took. So we ask Allah for guidance.
The truth is that if a person sees these transactions, and sees the transactions of banks, and sees the transactions of gambling which have started to increase now, such as insurance and the like, he fears, by Allah, the punishment. If the Children of Israel were punished for less than this, then we fear. When the hunting of fish was forbidden to them on the day of Saturday, Allah (Glorified and Exalted is He) tested them, so the fish would come on the day of Saturday in large numbers on the water, and on days other than Saturday they would not see the fish. So they resorted to a ruse and set up nets on Friday, and took the fish on Sunday, and said, "We did not hunt on Saturday." The form is correct that they did not hunt, but in reality they did hunt. So the criterion, my brothers, is the realities of things, not their forms. So we fear a punishment that will befall us through these matters. If we were to sell and buy according to the Sharia, and stay away from ruses and deceiving the Lord of the Worlds, this would be more beneficial for us and more blessed for us.
And as for the economic perspective—meaning it has become clear to us from the Sharia perspective that it is not permissible—from the economic perspective, it has now opened the door for the poor to rush into debts for this reason. So it becomes easy for one of them to buy a car for seventy thousand, yes, because he will go to the merchant and take it with great ease. But if this method did not exist, he would go to buy for twenty thousand, sixteen thousand according to his need, and according to what he has. So this transaction has burdened the backs of many people, and emboldened them to borrow from people. And when he dies, hundreds of thousands are found upon him, all due to this reason. For this reason, we warn against it economically and religiously, and we say:Sahih al-Bukhari 1427, 1428, .
The questioner : But people do not know anything about this?
The Shaykh : By Allah, my brother, we have a fatwa on this; we wrote a fatwa on it.
The questioner : The problem is that some of these companies claim that they have a Sharia committee, and that this Sharia committee issued a fatwa permitting this, O Shaykh.
The Shaykh : In any case, what is required of us is clarification, and we have clarified it now. So whoever hears this speech and is convinced by it and sees that the ruse does not make the forbidden lawful, let him praise Allah for the guidance and leave this. And whoever is not convinced, then for each one is a degree of what they did.
The Shaykh : This transaction has spread widely among the people, and in reality, it is not permissible from the Sharia perspective, and it is harmful from the economic perspective:
As for the Sharia perspective, it is known that if you came to me and said, "I want to buy such-and-such a car for fifty thousand riyals, give me fifty thousand riyals, and I will give you sixty thousand riyals after a year," is this matter permissible or not permissible?
The student: Not permissible.
The Shaykh : Not permissible, and there is no doubt about that.
The purchase of this car by the merchant or the company is only for the sake of reaching this ten thousand that was originally not permissible and has now become permissible through this ruse. This is not possible. What is forbidden is forbidden, and resorting to ruses to circumvent it only adds ugliness to it. This is like saying, "Take fifty thousand riyals and buy the car you want, and after a year give me sixty thousand riyals." There is no difference at all, except that the form you mentioned, where they buy it from the showroom and then sell it to you, is merely a ruse. If it were not for you, they would not have bought it, nor would they have thought about buying it. If they knew that you would delay in buying it after they bought it, they would definitely not have bought it for you. If they knew, they would not have given it to you. Therefore, you find that he takes precautions for himself; he goes to inspect the house and see if this house is worth the price or not. The same applies to the car. So he takes complete precautions. Then, if it happens that he bought it and you back out, he puts you on the blacklist and will never deal with you again. Also, the phrase "if he wants to return it, we will accept it" is like throwing dust in people's eyes, as they say, because you do not think that this man who wanted this car or this house or this land, and prepared for the increase, will back out. You do not think he will back out. The man has a purpose in this, and he must buy it. If you counted those who backed out, you would not find one in a thousand. Therefore, we see that this transaction is forbidden, and that it is a ruse to circumvent riba through a nominal purchase that is not intended.
And if the Shaykh al-Islam (may Allah have mercy on him) forbade tawarruq, and other scholars did so, and there is a narration from Imam Ahmad, and tawarruq al-'ayn exists with the seller, then this is more evil and more severe.
And if the Children of Israel, when fats were forbidden to them, said: "We will not eat the fat, but we will melt the fat, sell it, and eat its price," which is closer to the forbidden: this ruse, or the ruse I mentioned?
The ruse I mentioned is closer, because it reaches the forbidden in the first degree. This one does not reach the forbidden except after three degrees. And yet, the Messenger (peace and blessings be upon him) said:
May Allah, the Mighty and Sublime, curse the Jews, for Allah forbade them the fat (of dead animals) but they rendered it, sold it, and consumed its price.
قاتل الله اليهود، لَمَّا حُرِّمت عليهم الشحوم جملوه، ثم باعوه، فأكلوا ثمنهIf someone were to say: "Explicit riba is less severe than the transaction I mentioned," his statement would not be far from the truth, because this combines the ruse and circumventing Allah (Mighty and Majestic) with riba. So the harm of riba is present, and it is the increase that this merchant took. So we ask Allah for guidance.
The truth is that if a person sees these transactions, and sees the transactions of banks, and sees the transactions of gambling which have started to increase now, such as insurance and the like, he fears, by Allah, the punishment. If the Children of Israel were punished for less than this, then we fear. When the hunting of fish was forbidden to them on the day of Saturday, Allah (Glorified and Exalted is He) tested them, so the fish would come on the day of Saturday in large numbers on the water, and on days other than Saturday they would not see the fish. So they resorted to a ruse and set up nets on Friday, and took the fish on Sunday, and said, "We did not hunt on Saturday." The form is correct that they did not hunt, but in reality they did hunt. So the criterion, my brothers, is the realities of things, not their forms. So we fear a punishment that will befall us through these matters. If we were to sell and buy according to the Sharia, and stay away from ruses and deceiving the Lord of the Worlds, this would be more beneficial for us and more blessed for us.
And as for the economic perspective—meaning it has become clear to us from the Sharia perspective that it is not permissible—from the economic perspective, it has now opened the door for the poor to rush into debts for this reason. So it becomes easy for one of them to buy a car for seventy thousand, yes, because he will go to the merchant and take it with great ease. But if this method did not exist, he would go to buy for twenty thousand, sixteen thousand according to his need, and according to what he has. So this transaction has burdened the backs of many people, and emboldened them to borrow from people. And when he dies, hundreds of thousands are found upon him, all due to this reason. For this reason, we warn against it economically and religiously, and we say:
Allah will make him self-sufficient
ومَن يستغنِ يُغْنِهِ اللهAnd whoever leaves something for Allah, Allah will replace it with something better for him.
ومَن تَرَكَ شيئاً لله عوَّضه الله خيراً منهThe questioner : But people do not know anything about this?
The Shaykh : By Allah, my brother, we have a fatwa on this; we wrote a fatwa on it.
The questioner : The problem is that some of these companies claim that they have a Sharia committee, and that this Sharia committee issued a fatwa permitting this, O Shaykh.
The Shaykh : In any case, what is required of us is clarification, and we have clarified it now. So whoever hears this speech and is convinced by it and sees that the ruse does not make the forbidden lawful, let him praise Allah for the guidance and leave this. And whoever is not convinced, then for each one is a degree of what they did.