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Fatwa CenterBuying through a credit financing company
Question
Aslamu Alykum wa rahmato allah,my family owns a furniture store in america and recently we made a contract with a credit company that will allow our customers to buy from us and not pay anything for the first 3 months; after that they would recieve bills in the mail and they would begin making payments which offcourse has an interest rate which gets added every month. we will not get any of the interest money, we only get the total amount of the original sale and we get our money right away, and all interest the customer pays will go to that credit financing company. so basically the idea is we sell more because it is easier for customers to buy this way, however, there is interest involved in the transaction but will not be calculated until 90 days pass. Is this way of doing business halal or haram? Jazakom allah kol kheir inshallah
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.
If the said company buys the furniture from the store and owns it to an extent that if the furniture is lost [or broken] before signing the contract with the customers it bears the liability for it, in this case the contract is valid and it is permissible to deal with this company according to this transaction, and it is permissible for this company to sell to the customers at a higher price than the purchasing price, because it sells for them with a delayed payment of three months.
However, if the company lends money to the customers to buy the furniture, without the company owning it [furniture], and adds a profit for the loan, as it is the case in many banks, then the sale with this method is not permissible because the company lends money to the customers with a profit [interest] and this is forbidden Ribaa [interest and usury] whether the profit is calculated after three months or before the end of three months, because conditioning a profit on a loan [when signing the contract] is absolutely forbidden.
Allaah Knows best.
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