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Instalment Sale Without Interest

Question

Zayd wants to buy a car but does not have the cash. He can however pay monthly installments.  Bakr is prepared to help him, but also wants to “invest” or benefit, not only help. If he loans him the money and receives instalments to the value of more than the loan , then that will be interest. Is there a way in which such a transaction could be valid?

Answer

Bakr should buy the car directly from the supplier and take full ownership of it. He may then sell the vehicle to Zayd at a profit in fixed installments over a fixed period of time. For example, Bakr buys the car for R10 000.00. He then sells it to Zayd for R12 000.00 in fixed installments of R1000.00 per month over 12 months. By adopting the above procedure the transaction will be considered to be Shari’at compliant. 

Checked and Approved By:

Mufti Muhammed Saeed Motara Saheb D.B.

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