Forms of the Forbidden Installment Sale

Question: It would be wonderful, O Shaykh, if you could mention to us some forms of forbidden installment sales? May Allah reward you with good.


Answer: If a person buys something on deferred payment in installments, and then sells it for cash to the person from whom he bought it, this is called a buy-back sale (‘inah), and it is not permissible. However, if he sells it to someone else, there is nothing wrong with it; for example, if he buys a car on installments and then sells it for cash to another person in order to get married, or to pay off his debt, or to buy a residence, there is nothing wrong with that.
As for buying a car or something else on installments and then selling it for cash to the owner, this is called a buy-back sale (‘inah); because it is a ruse to obtain cash dirhams for more dirhams on deferred payment.