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What is the ruling on purchasing goods in installments from a bank that does not own or possess them, and that stipulates the buyer must pay compensation if they back out of the purchase?

1 min readAlso available in العربية

The aforementioned transaction is impermissible because, in reality, it is a loan with a stipulated increase upon repayment. The described scenarios are stratagems to achieve forbidden usury (riba). It is obligatory to cease engaging in such transactions.

Summarized from the full answer at Ftawy · reviewed Sep 2, 2026

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