Riba and installment sale : [2]

السؤال

Dear Dr Monzer, Jazakum Allahu Khairan both for your quick and helpful responses, and your greetings and cheerful words. And I am very much looking forward to the opportunity of meeting when you happen to be close to Germany ! Myself, I shall InSha Allah speak at the academy of management conference in Anaheim Los Angeles (08th August-13th August). I will be in California most likely In Sha Allah around 25 July. In case you are around and not too busy, I would be most grateful for the chance to give you a personal salaam while there ! I am further very sorry for my own late response, but I have been travelling and can only now read and respond to my e-mails. As regards the below issue, my knowledge is very limited and confined to what I have read from you and other valuable authors. The question of brother Hijaz I understand. How can it be Islamically justified that something which is sold for 100 $ cash can be sold for 130 $ on installment basis ? Your explanation of the stance of Islam on the concept of time of value of money, I also comprehend with no difficulty. The concept of the time value of goods I also understand-from the perspective of customer. He is ready to pay more lately in order to have more utility now. But how about the seller, who has 100 cell phones on stock ? How does this concept apply to him ? Because in both cases (selling on installment basis and for cash) the seller gives away the cell phone at the same time, which means that there is no difference in time value of the product for the seller when it comes to the two selling contracts (installment and cash). For him, the choice is ultimately and effectively between receiving cash immediately (and being 100 % sure that he gets his money) or between receiving his money in installments over the course of one year (with a probability that the buyer gets broke and does not fulfill his obligations). That means that the seller is equating Time Value of Product [Give away product today] + Money [Get 100 $ at time T 0] And Time Value of Product [Give away product today] + Money [Get 130 $ in installments from T 0 to T 11] Now if we solve this equation what we see is that for the seller the question appears to boil to one of time value of money (and of default risk). For him, 100 $ today is equal to 130 $ over the course of one year. For the seller it appears makes a difference whether if not he receives money now or later, because money he has now is a) not liable to default risk and b) can be reinvested in his business. In other words, while Islam does not know the concept of time value of money (that money creates an increment automatically as time passes by), business men apparently do know it. Or else, what would be the Islamic explanation for charging this high premium for selling the same product at the same time ? If it is not time value of money, is it only the probability of default that justifies this premium ? From the perspective of the customer I have no difficulty at all with the argument. It is fair for him to pay more. But from the perspective of the seller I am not quite sure it has become evident for me from below e-mail why he should be able to charge more. I would be most grateful if you could elaborate in two or three lines on this. Jazakumu Allahu Khayra Al-Jaza’, Wassalam Alaykum Wa Rahmatu Allahi Wa Barakatuh,

جواب الفتوى

أنقر هنالمشاهدة هذا المحتوى

تاريخ النشر

2008-03-30

التخصصات الرئيسية

العلوم المالية و المحاسبية
الدراسات الإسلامية

الموضوعات

• الفقه الإسلامي
• الربا
• البيع بالتقسيط

عدد الصفحات

2

نوع البيانات

فتاوى

لغة النص

الإنجليزية

رقم السجل

BIM-730463

• APA
• MLA
• AMA