What is the ruling on agreeing to buy a car for someone and selling it to them in installments, then taking contracts against them?

If two people agree that one will buy a car for the other and sell it to him in installments, and they make this agreement binding upon themselves, then this contract is invalid because the seller sold what he does not possess. The Prophet, peace and blessings be upon him, forbade selling what one does not own. However, if there is no binding agreement between them, then the matter is permissible, and what occurred is merely a promise to buy, not a binding sale.