5. The commodity must be in the seller's possession at the time of concluding the sale contract, meaning the seller must own the goods (التملك), have them in th

IMPORTANT NOTE: If a binding contract is made before the financial institute owns the car, this is an impermissible and invalid transaction because it involves selling what one does not own. On the other hand, if the agreement made initially is not a contract but merely a promise to purchase, then the process becomes permissible. The condition here is that when the item is attained, a new contract must be made with offer and acceptance, allowing both parties the freedom to proceed or withdraw. In this case, there should be no prior obligation, no money paid, and no signed commitment—only a promise to purchase. According to the majority of scholars, such a transaction is permissible, as the principle in sales is permissibility unless there is a specific prohibition. However, many banks require the buyer to commit before they own the item, either by signing a document, paying a deposit or a "down payment" or "administrative fees", or other similar practices. This is not permissible. _________ المسألة التاسعة: الييع بالتقسيط Installment Sales: DEFINITION: It is the sale of a commodity for a predetermined deferred period, with the price split into several installments, each having a specific due date. EXAMPLE: The seller has a car worth £40,000 in cash, but the deferred price is £60,000. The seller agrees with the buyer that the amount will be paid in twelve installments, with £5,000 paid at the end of each month. RULING: It is permissible according to most scholars. ’Āishah (may Allāh be pleased with her) said: ((اشترى رسول الله ﷺ من يهودي طعاما بنسيئة ورهنه درعا له من حديد)) "The Messenger of Allāh purchased food from a Jew on credit and pledged his iron armour as collateral." [Agreed upon] This method of sale benefits both the seller and the buyer. The seller increases his sales and diversifies his marketing methods, offering both cash and installment options. In the case of installments, the seller benefits from an increase in price in exchange for the deferred payment. The buyer, on the other hand, obtains the commodity even if he does not have its full value upfront and can pay for it in installments. Conditions for the Validity of Installment Sales: In addition to the general conditions for the validity of a sale, the following conditions must be met for an installment sale to be valid: 1. The goods must be owned and under the possession of the seller at the time of the contract. It is not permissible for them to agree on the price, set the payment terms and installments, and then have the seller purchase the goods and deliver them to the buyer later. This is prohibited, as stated by the Prophet ﷺ: ((لا تبع ما ليس عندك)) "Do not sell what you do not possess" [Narrated by Al-Bukhari, Hadith No. 2068; Muslim, Hadith No. 1603] 2. The price must be fixed at the time of the contract. It is not permissible to say, "If you pay within the first year, the price will be such-and-such, but if you pay during the second year, the price will be such-and-such..." 3. It is not permissible to require the buyer, either at the time of the contract or afterward, to pay an additional amount beyond what was agreed upon in the contract in the event of a delay in installment payments, as this constitutes prohibited usury (riba). Nor is it permissible to increase the amount due in exchange for a delay in payment. 4. This sale must not involve any third party. Many companies, when offering items on an installment plan, establish a contract with a bank or financing institution. This arrangement constitutes a riba transaction, as you are required to repay a larger sum to this lender than the original loan.