Question:
Assalamualaikum. I would like to ask, is it permissible to purchase gold by instalment? This means I receive and use the gold first, then I made the payment.
Brief Answer:
Sales and purchase of gold by instalment is prohibited and is invalid as it contains the element of riba al-nasiah which is riba that takes place due to delaying the payment intentionally.
Explanation:
Originally, the ruling of purchasing something is permissible whether by cash or instalment.
However, if a transaction involves ribawi items (items included under the ruling of riba), then each party involved shall give specific attention so that he/she may not be involved in riba.
Ribawi items are mentioned in a hadith narrated by ‘Ubadah bin al-Somit R.A that Prophet Muhammad PBUH said:
الذَّهَبُ بِالذَّهَبِ وَالْفِضَّةُ بِالْفِضَّةِ وَالْبُرُّ بِالْبُرِّ وَالشَّعِيرُ بِالشَّعِيرِ وَالتَّمْرُ بِالتَّمْرِ وَالْملح بالملح مثلا بِمثل سَوَاء بسَواءٍ يَدًا بِيَدٍ فَإِذَا اخْتَلَفَتْ هَذِهِ الْأَصْنَافُ فَبِيعُوا كَيْفَ شِئْتُمْ إِذَا كَانَ يَدًا بِيَدٍ
"Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, and salt by salt, like for like and equal for equal, payment being made on the spot. If these classes differ, sell as you wish if payment is made on the spot.”
Sahih Muslim (1587)
Based on the above hadith, sales and purchase of ribawi items like gold jewellery shall be done on the spot and not delayed.
The explanation; sales and purchase shall be done on the spot on an occasion; whether the possession takes place physically or constructively (for example, by giving the receipt of the transaction). It shall not be delayed by one or two days afterwards.
(Refer: Kompilasi Pandangan Hukum Mesyuarat Muzakarah Jawatankuasa Fatwa Majlis Kebangsaan Bagi Hal Ehwal Ugama Islam Malaysia, pg 81)
If there is a condition of delaying the payment or delivery of the item, then it is included under the category of riba al-nasiah; which is riba that takes place due to the delayed time of payment. In fact, it is of greater prohibition when the delay is included with some additional charges.
(See: al-Mu’tamad fi al-Fiqh al-Syafie, 3/110-111)
Therefore, sales and purchase of gold by instalment like the above-mentioned issue is prohibited and invalid as it contains the element of riba al-nasiah which is a riba that takes place due to the delayed payment intentionally.
As an alternative, the buyer may take a loan from a third party before buying the gold in cash.
However, the buyer shall avoid himself from lending money from the same party who buys the gold as to not be succumbed to the Prophet PBUH’s prohibition pertaining to ‘sales and purchase with loan’ at the same time.
This is in accordance with the Prophet PBUH’s hadith:
أنَّ النبيَّ ﷺ نَهى عن بَيعتينِ في بيعةٍ وعن بَيعٍ وسَلَفٍ
The Messenger of Allah forbade lending on the condition of a sale, selling what you do not have, and profiting on what you do not possess.
Musnad Ahmad (10/120)
Some scholars like Ibn al-Qayyim Rhm commented on the hadith as the basis in the field of muamalat which prohibits Muslims from the ploy of committing riba in sales and purchase. Even though it is not mentioned clearly, it may be understood based on the scenario that there are two intentions to be achieved by both sellers and buyers; which are:
- The gold seller lends his money so that his gold may be sold. While if the buyer does not want to buy the gold, surely the buyer will not lend his money.
- While if the buyer is not given a loan of cash money by the buyer, surely, he will not purchase the gold.
(See: Tahzib Sunan Abi Daud, 2/190)
Last but not least, we advise the buyers to not add their debts unless matters are exigent. While if we have more money after the main spending is deducted, then it is permissible to buy other assets and property like gold with the condition that the payment is done by cash.
Wallahu a’lam.