The Difference Between the Issue of Tawarruq and the Two Types of Riba: Riba al-Fadl and Riba al-Nasi'ah
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Question: From the definition of riba al-nasi'ah, which is an increase in the item in exchange for deferral, to what extent does this apply to the bag loans and car loans currently practiced instead of the benevolent loan? Please issue a ruling for us, may Allah reward you with good.
Answer: Riba is: taking something in exchange for its like with an increase. This is riba al-fadl; for example, a sa' for two sa' of the same type, or a dirham for two dirhams, whether it is immediate or deferred.
If it is a debt for a debt, it becomes both riba al-fadl and riba al-nasi'ah. So if he takes dirhams with an increase, this is riba al-fadl, whether it is hand-to-hand or deferred. As for the issue of tawarruq, it is not of this category. It is: taking a commodity for dirhams to a term, then he sells it for cash on that day, the next day, or later, to someone other than the one who bought it from him.
The correct view is that it is permissible; due to the generality of the evidence, and because it contains relief and facilitation, and the fulfillment of a present need. As for the one who sells it to the one who bought it from him, this is not permissible. Rather, it is from the actions of riba and is called the issue of 'inah, and it is forbidden; because it is a ruse to commit riba. It is selling a type for its type with a difference, whether deferred or cash.
As for tawarruq, there is no harm in it, as mentioned earlier. It is buying a commodity, such as food, a car, land, or otherwise, for a counted number of dirhams to a known term, then selling it for cash to someone other than the one who bought it from him, to fulfill his need, such as marriage or otherwise.
Answer: Riba is: taking something in exchange for its like with an increase. This is riba al-fadl; for example, a sa' for two sa' of the same type, or a dirham for two dirhams, whether it is immediate or deferred.
If it is a debt for a debt, it becomes both riba al-fadl and riba al-nasi'ah. So if he takes dirhams with an increase, this is riba al-fadl, whether it is hand-to-hand or deferred. As for the issue of tawarruq, it is not of this category. It is: taking a commodity for dirhams to a term, then he sells it for cash on that day, the next day, or later, to someone other than the one who bought it from him.
The correct view is that it is permissible; due to the generality of the evidence, and because it contains relief and facilitation, and the fulfillment of a present need. As for the one who sells it to the one who bought it from him, this is not permissible. Rather, it is from the actions of riba and is called the issue of 'inah, and it is forbidden; because it is a ruse to commit riba. It is selling a type for its type with a difference, whether deferred or cash.
As for tawarruq, there is no harm in it, as mentioned earlier. It is buying a commodity, such as food, a car, land, or otherwise, for a counted number of dirhams to a known term, then selling it for cash to someone other than the one who bought it from him, to fulfill his need, such as marriage or otherwise.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.