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The question

Is it permissible to contract with a financing company that pays the full dues for finishing works in advance, then allows the customer to pay the amount in installments later, while I take an upfront payment from the customer?

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Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 20261 min readAlso available in العربية
The answer

If you contract with a client and receive an advance payment from him, then a financing company pays you the remainder, which it will collect from the client with an increment, this is an interest-based transaction (riba) because the company has lent the client the remaining amount to recover it with an increment.

This differs from a client contracting with a company for a specific work with installments, and then the company contracting with you to perform the work for a lesser cash payment, provided that the two contracts are not conjoined.

According to Shariah standards, it is permissible for an institution, as a commissioner (mustasni'), to conclude a manufacturing contract (istisna') with a manufacturer (sani') and pay the price in cash. Then, it may sell the manufactured goods to another party through a parallel manufacturing contract with the same specifications and for a deferred payment, provided that the two contracts are not linked.

Summarized from the full answer at Ftawy · imported

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Where this answer came from
Source platform
Ftawy
Original fatwa ID
185744
Imported
Translation status
Source text, unreviewed
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