Category: the book of sales Transactions

The ruling on buying Products for more than their Price for delayed Payment (i.e., on Credit)

Question :

I bought a house for an increased amount from the company where I work, because I am an employee whose income is not very high. Is this considered from the Riba that Allâh has forbidden?

Answer:

This is not considered from the Riba that Allâh has forbidden, as long as the company owns the house before you make the agreement with them. If the person buys something for a price to be paid later that is more than its current price, there is no harm in that. Shaykhul-Islam Ibn Taimiyyah reported that there is a consensus (Ijma') among the Muslims concerning the permissibility of this, because the mutual benefit for the seller and buyer necessitate it. The seller benefits by the increased price that he gets and the buyer benefits by the delayed payment. This is not a form of Riba, because Riba has been specified for particular things that have been reported in the Hadith of 'Ubadah bin As-Samit who related that the Prophet said:
"Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates and salt for salt, like for like, the same for the same, hand to hand (i.e., to be paid on the spot)."

Thus, these six things and whatever shares the same purpose with them even the scholars differ about that they are the things that Riba applies to. There are two conditions that apply to that which is sold for something of its same type (or species):

The first is that they must be equivalent in weight for that which is weighed, and measurement for that which is measured.

The second is that both parties must take possession of what they are trading for before they part from each other.

In reference to what is sold for something of a different type (or species), the condition of equivalency is not stipulated in that. However, if the item is sold for something that shares the same purpose, the things being traded in the sale must be taken possession of by those making the deal before they part from each other. This is due to the Prophet's statement:

"If these types of items differ, then sell them however you wish, as long as it is hand to hand (i.e., exchange being made on the spot)."

Things other than these types of items and whatever shares their same purpose, there is no Riba in it, like animals and clothes.

Indeed the Prophet commanded 'Abdullah bin 'Amr to prepare an army, so he would take a camel for two camels (to be given later as payment) and two camels for three camels (to be given in return later) from the camels of charity. However, if the time to pay the money comes and they delay the payment and the loaner adds some increase to the payment because of that (tardiness in payment), then that is forbidden and it is included in the Riba dealings.