This transaction is a loan with Riba (usury)
Fatwa No: 245599

  • Fatwa Date:8-4-2014 - Jumaadaa Al-Aakhir 8, 1435
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Question

I intend to sell some products to clients, the clients don't have cash, but there is a lender who is willing to pay direct to us (as suppliers) and let the clients take the products then load his profit on the repayable amount. But because the lender isn't a Muslim he simply terms that profit as interest. Is there anything wrong for me to participate in such a deal,and even organize and link up the lender and the borrower. Mind you, no cash is exchanged between the borrower and the lender, but rather the borrower gets a product and pays back (money) gradually to the lender.

Answer

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

Paying for a product on behalf of the buyer and then getting that amount with any addition in return is a loan with Riba (usury). Therefore, it is not permissible to carry out those transactions or facilitate them because they are forbidden loans with Riba and Allaah has forbidden us from helping sinful people in their sin. Allaah says (what means): {… but do not cooperate in sin and aggression.}[Quran 5:2]

For more benefit, please refer to Fatwa 156083.

But if the customers ask someone who has money to buy them the intended goods and then he sells them those goods with a profit after having possessed those goods, then this is permissible.

Alternatively, he may also make an agreement with you to buy goods from you on the grounds that you sell the goods on his behalf for a profit; so you would be agents acting on his behalf to sell what he purchases from you and then enstrusts you to keep them for those who are interested in the goods, and you may ask for a fee for doing so.

These are alternatives to avoid the forbidden transactions in question, so that person who has the money gets a profit and those who have a hard time paying can get what they need.

Allaah Knows best.

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