Ruling on deferred sale with an increase in the price
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Question:
A man lends a loan, such as ten thousand for fifteen thousand, and the return is not in cash, but rather in goods. He says to the one who borrowed from him: "These goods are worth ten thousand, and they are due from you for fifteen thousand." Is this usury or not?
Answer:
This requires detailed explanation. If he gave him ten thousand in cash for fifteen thousand on a deferred basis, this is clear usury, and it is the usury of the pre-Islamic age of ignorance and the usury of kings, so it is not permissible.
However, if he bought a commodity worth ten thousand, such as a car bought for ten thousand or eleven thousand, and sold it to him for more than that on a deferred basis with a known term, and the car is with him, he has taken possession of it, and it is in his custody, then he sold it to Zayd or 'Amr, a car or a house he bought for one hundred thousand... on deferred terms, this is not usury. This is not conditioned by that. Deferred sale is among the lawful financial transactions. If he sells a car worth ten thousand for twelve, thirteen, fourteen, or twenty thousand on deferred terms, or a house worth one hundred thousand for one hundred and twenty thousand, or one hundred and thirty thousand, or more, or land, or a farm, and so on, this is from the category of financial transactions, from the category of deferred sale. A deferred sale does not occur at the spot price; there must be an increase, because the debtor wants the increase, he wants a benefit in return for this deferral. And Allah (Exalted and Majestic is He) has permitted for His servants in financial transactions [al-Baqarah:282]. So financial transactions... are from this. And likewise salam (forward sale); people used to make forward sales on fruits for two or three years, so the Prophet (peace and blessings be upon him) left them as they were when he arrived in Madinah.
The point is: that salam (forward sale) and financial transactions on deferred terms are permissible with an increase over the spot price, whether it is in a commodity, a car, a house, a shop, land, or otherwise.
Question: ... or a quarter of it..?
Answer: Whether it is .. or a quarter of it.., but the commodity must be with the seller, not with the merchants, it must be with him .., whereas if it is ... it is not permissible, it would be invalid, but the commodity must be with him, he has owned it in his house, in his custody, in the market, he has owned it, then he sold it afterwards.. or a house that is with him in his ownership, or land in his ownership that he has taken possession of.
A man lends a loan, such as ten thousand for fifteen thousand, and the return is not in cash, but rather in goods. He says to the one who borrowed from him: "These goods are worth ten thousand, and they are due from you for fifteen thousand." Is this usury or not?
Answer:
This requires detailed explanation. If he gave him ten thousand in cash for fifteen thousand on a deferred basis, this is clear usury, and it is the usury of the pre-Islamic age of ignorance and the usury of kings, so it is not permissible.
However, if he bought a commodity worth ten thousand, such as a car bought for ten thousand or eleven thousand, and sold it to him for more than that on a deferred basis with a known term, and the car is with him, he has taken possession of it, and it is in his custody, then he sold it to Zayd or 'Amr, a car or a house he bought for one hundred thousand... on deferred terms, this is not usury. This is not conditioned by that. Deferred sale is among the lawful financial transactions. If he sells a car worth ten thousand for twelve, thirteen, fourteen, or twenty thousand on deferred terms, or a house worth one hundred thousand for one hundred and twenty thousand, or one hundred and thirty thousand, or more, or land, or a farm, and so on, this is from the category of financial transactions, from the category of deferred sale. A deferred sale does not occur at the spot price; there must be an increase, because the debtor wants the increase, he wants a benefit in return for this deferral. And Allah (Exalted and Majestic is He) has permitted for His servants in financial transactions
O you who have believed, when you contract a debt for a specified term, write it down.
يَا أَيُّهَا الَّذِينَ آمَنُوا إِذَا تَدَايَنْتُمْ بِدَيْنٍ إِلَى أَجَلٍ مُسَمًّى فَاكْتُبُوهُThe point is: that salam (forward sale) and financial transactions on deferred terms are permissible with an increase over the spot price, whether it is in a commodity, a car, a house, a shop, land, or otherwise.
Question: ... or a quarter of it..?
Answer: Whether it is .. or a quarter of it.., but the commodity must be with the seller, not with the merchants, it must be with him .., whereas if it is ... it is not permissible, it would be invalid, but the commodity must be with him, he has owned it in his house, in his custody, in the market, he has owned it, then he sold it afterwards.. or a house that is with him in his ownership, or land in his ownership that he has taken possession of.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.