بســـم اللــه الرحــمــن الـرحـــيــم
▪️Ruling on installment purchases if there’s 3rd party involvement▪️
Our Shaykh, Muhammad ibn Hizaam -may Allaah preserve him- was asked the following question:
The questioner says: What is the Islamic ruling concerning installment purchases, bearing in mind that he uses an agent to purchase the item and hand it over to him?
The questioner’s saying: “he uses an agent”, seems like he went through a (finance) company or the banks; who send an agent to buy what he requires before selling it to him at a higher price. (If that’s the case, then) this is impermissible, because they did not purchase it with the intention of owning it, they only purchased it to profit from him. They’ve set themselves as intermediaries in this purchase, because their objective isn’t to own (this commodity), their only objective is to lend money to the buyer just for him to pay back more. This is a ploy to get around Ribaa, and this form of transaction is impermissible.
However, if you were to deal with the vendor directly and say, “I want this refrigerator, but I’ll pay you in three months time.” And let’s assume it costs eighty thousand (Riyaals). If the vendor says to him: “Because you want to pay after three months, I’ll sell it to you for a hundred thousand (Riyaals)”. If they agree on this price (beforehand), this is permissible. As far as involving a 3rd party, such as the bank or the likes in this transaction, then this is a ploy to get around Ribaa. We find these so-called Islamic banks dealing in these forms of Ribaa-based transactions.
Therefore, it’s impermissible for a person to take such loans.
Abu Ishaq Muhammad Ibn Ahmad Ba-‘Alawi
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