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Is it permissible for an institution to conduct a lending operation where it sells goods at very nominal prices, then makes the customer sign a contract to purchase goods at a much higher price in installments, and the institution lends the customer a sum of money and recovers a larger sum in installments, under the pretext of activating a discount upon payment of the first installment? And what is its ruling?

1 min readAlso available in العربية

The transaction mentioned is a stratagem to circumvent usury (riba), because deducting from the price makes it a loan with interest, and the price of the commodity is fixed and should not be manipulated. Any transaction intended to exchange money for more money at a later date is prohibited usury (riba muharram), and this is what Sheikh Al-Islam Ibn Taymiyyah affirmed. This transaction is considered a clear circumvention of usury, which corrupts banking murabaha, as explained by Sheikh Yusuf Al-Shubaili.

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

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