Category: the book of sales Transactions

The ruling on Debt

Question :

A man wanted to get married, but he did not have a sufficient amount to cover the cost of the dowry. So, he went to an owner of a business to seek a loan from him. The owner of the business said to him, "I will sell you a car for 17,000 Saudi riyals as a debt, and you will pay it off completely after a complete year." Is this Riba, since the value of the car in cash is only 10,500 Saudi riyals? This car is what the condition is based upon, and the condition between this seller and the man who wants to get married is centered on it.

If the matter is like what has been mentioned of a person buying a car from another to be paid for later at a greater price than what it is sold for in cash up front, and so the buyer can sell it to whomever he wishes other than who sold it to him initially and whoever has his ruling, then that is not Riba. Rather, it is a correct sales agreement that is permissible. However, if he bought the car, for example, from a person to be paid for later in order to sell it back to him for cash up front at a lower rate than what he bought it for, then that is selling cash for cash with an increase, which is the Riba that Allâh and His Messenger forbade. The sales agreement for the car is superficial and it is only intended for deceit and to use trickery to practice Riba and devour wealth in falsehood. Likewise, if the buyer sells the car to a person who knows that it is to be sold to the original seller in his action or a person who is a middle man who works with the original salesman so that the car will return to him in the end, all of that is deception and deceitful Riba. May Allah send blessings upon our Prophet Muhammad, his family and his Companions.

Source:
The Permanent Committee
Fatawa Islamiyah, Vol. 4 Pages 362-363