The ruling on one who buys a commodity on installment and then sells it for less than its price
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Question:
After this, we move on to the Syrian Arab Republic to read a letter sent by one of our brother listeners from there. He wrote the letter while in Jeddah. He says: Our brother Faisal ibn Ahmad al-Ali has a case. He says: A man does not need money, and he cannot borrow except by buying a need for double its price, then selling it to obtain the money. An example of this is: A man borrowed a car whose market price is five hundred thousand pounds, and when he borrowed it for a year, he bought it for nine hundred thousand pounds, then sold it for five hundred. Is this action permissible, knowing that people’s talk has increased about this, with some saying it is riba, and others saying it is permissible? So what is your guidance, Your Eminence?
Answer:
The correct view is that it is permissible. This is the view of the majority of scholars. There is no harm in it. This is called installment sale. If the commodity is with the seller, he has taken possession of it and owns it, then he sells it to a person on credit for known installments, and then the buyer sells it for less to meet his need, such as marriage or otherwise, there is no harm in that. It is established in the two Sahihs from the hadith of Aisha (may Allah be pleased with her) that the people of Barira sold her on installments. They sold her to Aisha on installments, forty dirhams or nine ounces each year for nine years on installments, and Aisha bought her for cash.
The point is that installments are a known matter, even in the time of the Prophet (peace and blessings be upon him). So there is no harm in a person buying a commodity on installments, then selling it for less cash for his need for marriage, or building a residence, or paying off a debt that has burdened his family, or the like. However, the seller must have owned the commodity, taken possession of it, and the commodity must be in his possession. He is not selling something that is with other people. The Prophet (peace and blessings be upon him) said:Sunan Ibn Majah 2187Hasan (Darussalam) And he (peace and blessings be upon him) said: Sunan Abi Dawud 3499Hasan li ghairih (Al-Albani).
It is permissible to sell a commodity that one has owned and taken possession of. However, it is not permissible to sell goods that are with other people, and then buy them. The buyer buys the commodity that is with the person who has owned it, buying it for known installments. Then, when he receives it and takes possession of it, he sells it afterwards and meets his need, even if for less, or even for half. The Prophet (peace and blessings be upon him) bought a camel for two camels in some of the expeditions, up to the camels of charity. May Allah send prayers and peace upon him. Yes.
The presenter : May Allah send prayers and peace upon him.
After this, we move on to the Syrian Arab Republic to read a letter sent by one of our brother listeners from there. He wrote the letter while in Jeddah. He says: Our brother Faisal ibn Ahmad al-Ali has a case. He says: A man does not need money, and he cannot borrow except by buying a need for double its price, then selling it to obtain the money. An example of this is: A man borrowed a car whose market price is five hundred thousand pounds, and when he borrowed it for a year, he bought it for nine hundred thousand pounds, then sold it for five hundred. Is this action permissible, knowing that people’s talk has increased about this, with some saying it is riba, and others saying it is permissible? So what is your guidance, Your Eminence?
Answer:
The correct view is that it is permissible. This is the view of the majority of scholars. There is no harm in it. This is called installment sale. If the commodity is with the seller, he has taken possession of it and owns it, then he sells it to a person on credit for known installments, and then the buyer sells it for less to meet his need, such as marriage or otherwise, there is no harm in that. It is established in the two Sahihs from the hadith of Aisha (may Allah be pleased with her) that the people of Barira sold her on installments. They sold her to Aisha on installments, forty dirhams or nine ounces each year for nine years on installments, and Aisha bought her for cash.
The point is that installments are a known matter, even in the time of the Prophet (peace and blessings be upon him). So there is no harm in a person buying a commodity on installments, then selling it for less cash for his need for marriage, or building a residence, or paying off a debt that has burdened his family, or the like. However, the seller must have owned the commodity, taken possession of it, and the commodity must be in his possession. He is not selling something that is with other people. The Prophet (peace and blessings be upon him) said:
Do not sell what is not with you.
لا تبع ما ليس عندكIt is not lawful to combine a loan with a sale, nor to sell what you do not have
لا يحل سلف وبيع، ولا بيع ما ليس عندكfor the Messenger of Allah (ﷺ) forbade to sell the goods where they are bought until the tradesmen take them to their houses.
ونهى أن تباع السلع حيث تبتاع حتى يحوزها التجار إلى رحالهمIt is permissible to sell a commodity that one has owned and taken possession of. However, it is not permissible to sell goods that are with other people, and then buy them. The buyer buys the commodity that is with the person who has owned it, buying it for known installments. Then, when he receives it and takes possession of it, he sells it afterwards and meets his need, even if for less, or even for half. The Prophet (peace and blessings be upon him) bought a camel for two camels in some of the expeditions, up to the camels of charity. May Allah send prayers and peace upon him. Yes.
The presenter : May Allah send prayers and peace upon him.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.