What is the ruling on refinancing from Al-Rajhi Bank if the current financing is 99,000 Saudi Riyals for a period of 3 years and 7 months, and the new financing is for a shorter duration and a smaller amount?
It is permissible to obtain additional financing, provided it is independent of the first financing, and there is no agreement or collusion to repay the first debt from the second financing. The Islamic Fiqh Academy holds that anything that leads to an increase in the debtor's debt in exchange for an extension of the term, or as a pretext for it, is considered a forbidden "debt for debt" transaction in Islamic law. Sheikh Sulaiman Al-Majid is of the opinion that as long as it is not stipulated that the installments of the first financing must be repaid in order to obtain the second financing, then it is permissible and is not considered a "reversal of debt"; because the first debt remains as it is, and the second financing is independent of it.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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