Rules Concerning Ribā: Ruling on Using a Credit-Cash Buyback (Tawarruq) as an Alternative to Ribā

Practical Laws of Islam as per the teachings of Imam Khamenei

Rules Concerning Ribā: Ruling on Using a Credit-Cash Buyback (Tawarruq) as an Alternative to Ribā

English:

Question #1613:

Suppose a person is in need of a loan. They cannot get a ribā-free loan. Is it permissible for them to, for example, buy goods on credit and sell the same to the seller on the spot for a cash price that is less than the original price of the goods?

Answer #1613:

This type of transaction is nothing but a play to circumvent a ribā-based loan transaction. It is both ḥarām and invalid.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Rules Concerning Ribā