Ibn ‘Abbās was asked, “What about a man who sells a piece of silk on deferred payment, then buys it back for less?” He replied, “Dirhams exchanged for dirhams, with a piece of silk coming between them.”

Anas ibn Mālik was asked about something similar and said, “This is among the things Allah and His Messenger have forbidden.”

The Sunan collections report that the Prophet, may Allah bless him and grant him peace, said:

“Whoever concludes two sales in one transaction is entitled to the lower of the two prices, or else incurs usury.”

These people have indeed concluded two sales in one transaction. The same applies when two people agree upon a usurious transaction, then approach a shopkeeper and ask him for goods equivalent in value to the sum involved. The provider of the money buys the goods; the recipient then sells them on deferred payment, then returns them to the shopkeeper for less. The shopkeeper thus acts as an intermediary between them for a fee. This too is undoubtedly usury.

The same applies when they combine a loan with preferential terms in a sale, lease, or other transaction—for example, when someone lends another one hundred and sells him a commodity worth five hundred, or rents him a shop for fifty when its rental value is one hundred. This too is usury.

Al-Tirmidhī and others report from ‘Abd Allāh ibn ‘Umar that the Prophet, may Allah bless him and grant him peace, said:

“It is not lawful to combine a loan with a sale, to stipulate two conditions in a sale, to profit from something for which one has not assumed liability, or to sell what one does not have.”

Al-Tirmidhī said, “This is an authentic hadith.” Thus, the Prophet, may Allah bless him and grant him peace, prohibited combining an advance—that is, a loan—with a sale.

The fundamental principle in this matter is that purchases fall into three categories: