A word of caution for those who might think that the two examples mentioned are the same. It is tempting to say that sale and loan contracts are similar or the same, and that both are riba if the financial outcome is the same. We have to understand that riba, where money is exchanged for money, is not permissible, while a sale contract, where money is exchanged for a non-monetary item, is permissible. Those who fail to grasp this concept are very similar to those mentioned in this verse: "Those who take ribā (usury or interest) will not stand but as stands the one whom the demon has driven crazy by his touch. That is because they have said: 'Sale is but like ribā,' while Allah has permitted sale and prohibited ribā." (Qur'an 2:275). So be careful not to be like these people who looked at the financial outcome in terms of the costs of the arrangement but ignored the fundamental nature of the transactions. I have covered rules of RIBA in more details in this video - ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-18FJgXjqW0w.htmlsi=Q1ms2rf7Ace_M9aQ
@@AlmirColan This verse is for people like you.Who themselves dont know why usury is prohibited and what is definition of interest.Interest is the rent for the money why buyer goes for higher price??beacuse he does not have the full money to pay so basically supplier is renting its money.which is haram in Islam.
Why can't we sell money for profit? Suppose, I want to buy a lot of trinkets from different shops which are priced around 2-4 dollars. I have a 1000 dollar note and a 5 dollar note. My neighbor has 500 pieces of 2 dollar notes. If I want to buy this stack of 2 dollars by giving him the extra 5 dollar as incentive should it be considered as Riba? Here isn't I am just buying transactionability for 5 dollars? For making the situation simpler let's also consider that it's a spot transaction.
@@AlmirColan simply if you can’t afford it don’t buy it. If you still buy it at a higher price than what it’s valued at then you know you are paying riba so don’t try and delude yourself
Is Fiat currency 'money' as per Islamic rulings? or should it have it's own intrinsic value? Fiat currency loses its worth with time. Reconsider your Riba definition.
I recently went to a dealership to buy a used car with cash only. To my surprise, they weren't even willing to accept it because the norm has now become to take a loan and get into monthly payments. And of course that includes interest. That's unfortunate. I didn't buy the car, alhamdulillah.
Crazy how a lot of people even among our ummah doesn't consider that knowing riba is haram. Either that or they just don't care consuming it as long as they get rich. Astaghfirullah...
😂I recall walking into many dealerships a few years ago to buy a used car in cash. Everyone kept looking at me as being crazy for wanting to pay cash when I could have easily gotten the car on loan. Alhamdulillaah, for the guidance of Allah.
When I researched car purchasing a few years ago, I discovered that late payment penalties are prohibited (haram) in Islam. Additionally, multiple seller contracts are also not permissible, indicating that the dealer may not be the sole owner or the vehicle is financed. It became clear to me that these interest-free offers involved Riba and were prohibited, so I opted out. Alhamdulillah, I borrowed and saved money and Allah blessed my savings, enabling me to purchase a car that I still own today. And Allah knows best.
The video and sound quality has improved significantly compared to older videos! Great job! I would suggest explain future Islamicfin matters with examples that have numbers for us to have better understanding
I enquired about the first type of transaction you mentioned when I was buying a car and I was told by a knowledgeable person, we do not make halal what Allah has made haram , we do not ask the dealership to change price of car to accommodate interest. Allah has not permitted anyone to change haram to halal in what ever way, that’s what Jews did in history
The first type of transaction was riba, and the second was trade. Hopefully, we understand the difference and have a clear and specific distinction between when one is engaging in riba and when in trade.
Bro Almir Colan .... You are good for giving FATWA regarding money and finance much better than any other Imam ... May Allah bless you for spreading Islamic knowledge ....
that's a big statement, mate, Mr Almir is an employee for MCCA Bank which is so called islamic Bank . a riba based financial institute . so if you dint know right from wrong , don't just clap for anyone
To learn more about RIBA, the different types of it, and how to judge business and financial transactions, watch this video I recorded earlier: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-18FJgXjqW0w.htmlsi=GxYSZvCMX9DRfLxL
To learn more about RIBA, its types, rules of trade vs. riba, and similar topics, please watch this longer video: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-18FJgXjqW0w.htmlsi=Q1ms2rf7Ace_M9aQ
One thing to keep an eye on is when ownership transfers. In some loans, although there may be a "interest" component in the principle value, the vehicle ownership will dictate the halal or haram nature. For example, some hire purchase type loans remain the property of the dealership until final payment is made.
Thank you for your content. Not sure if this matter was brought up in this channel, but wanted to know if dex instruments in what they call Defi(Decentralized Finances) is permitted. To be more specific; There are liquidity pools of 2 stable coins, and they pay you for providing liquidity to the pool. How is it different from bank deposit with interest and how is it not different with investing in exchange buro? جزاكم الله خيرا
It depends on how they calculate their payments to you. If it's based on the amount you "invest" as a fixed rate of return, then yes it's riba. A simple way to determine is whether they're paying you for giving them money or as a part of something that money is enabling in terms of trade. Also if there's no risk of loss is probably riba
I searched this a lot. It is not permissible since there is riba added in contract whether during or after the contract. Any contract which entails riba is haram.
@@aribrahim1898 no it's not allowed. Human is imperfect and can go to loses and unemployment, only Allah is perfect. So what if you are not able to reply, you will absolutely has to give riba in the end. So better not to sign any such kind of contract from the start.
Salam, your videos are insightful. I noticed you have a membership website I’d like to know a-bit more about the membership option before signing up. If you have time in your calendar happy to have a personal conversation as I feel it could help me gain a foundation knowledge in Islamic finance. Look forward to hearing from you Inshallah.
You may ask anything about Islamic finance, I would try to share the answer, inshaALLAH! Mr. Colan is perhaps a busy man to have one on on session! You can count on me, while I would like to address your queries inshaALLAH
Salam Alaykum, last year i „bought“ a car. I was at the dealership and the price was around 42.000€. I talked to the car seller about financing the car with 0% Interest. He made me a offer: 4 years paying monthly about 450€ and at the end i have to pay around 25.000€ and the car would be mine. The total price increased from 42.000€ (if i had the money to pay cash) to 47.000€ (financing over 4 years, no extra fees/payments). Are these 5.000€ more seen as riba or is this halal? How i understood it from the video this is allowed, right?
The economic term for “money for money” would be cost of financing. An intriguing aspect of interest rate is that if a central bank sets the interest rate to zero, this would lead to huge money supply in the economy (because of zero cost loans available, people will borrow more) and will lead to massive inflation. Because of zero cost financing, people will borrow more to cover their expenses. This in turn will drive the prices of goods up. So in the end, people will have to shell out more money to buy stuff. It is kind of a self regulated system.
The nature of the transaction is different from the cost of the transaction. Additionally, central bank rates and actual bank rates are different. My point was about the nature of the transaction. The central bank's role in setting these rates is based on specific transactions that enable these artificial monetary policies, which are essentially synthetic political solutions to real economic problems.
When you finance a car in my country, the bank pays the full amount to the dealership and takes ownership of the car and then sell it to you at a higher price. For example if the car costs 10k, the bank pays 10k to the dealership and sell it to you for 12k over 60 month payments. You don't really borrow money or take a loan from anyone and have to pay it back. Is this also considered riba?
Lets consider a simple scenario where a shop/ online shop giving discount price if we pay in cash and in full, they will give a discount on the labeled price, but they also have EMI with 0% riba, where they are selling the product, but as labeled price, will that be also going to be riba? please let me know, thanks in advance.
To have different prices for spot or deferred payment of goods in a sale transaction is fine, as long as you pick one arrangement and thus one price at the start, and it does not change later with time.
@@abushnuffread carefully what I said and you will find that it matches exactly what scholars are saying - you are missing the point. Scholars are talking about scenario where price changes after sale transaction is concluded.
The entire western monetary system is built on Riba. The very money in your pocket is created out of Riba. What’s your point on focussing on some miserly transaction at a car dealership. The principal amount borrowed is not principal anymore because it’s subjected to inflation through money creation done through debt.
AOA brother, I am following your riba videos since 2017 but I beg to differ here . Lets say novated lease triparty agreement b/w you, your company and bank, in this case company cuts salary and pay bank as lease payments. However, this scenerio you thinks as a car subject matter but in reality it is a loan b/w bank and you where bank pay initial upfront to buy car and you pay back lease payment (plus riba) to bank. Please reply brother if this is correct understanding?
In novated leases, the subject matter is the car, and the company’s payments from your salary are simply a payment arrangement on your behalf, often done for tax purposes. It is not a loan but a lease. The method of calculating the rental rate does not make the lease an interest-bearing mechanism.
Could you please explain more about the difference between the two scenarios? Why is one halal while the other is not even though they are both technically the same in terms of the amont of money involved?
You can profit from the sale of goods, but not from the sale of money. If you open any book of hadith and look at the transactions, you will find a hadith about exchanging gold for gold in equal amounts and hand to hand. (Next video will talk bit about that insha'Allah)
But How do u link it with the fact money nowadays do not have a static value all year.. It devalues with time. that's why it run in cycles of high Interest rates and low interest rates rates.
السلام عليكم ورحمه الله وبركاته. So if I want to buy a house is it the same as you explained for car? Because I have heard them say it's a home loan or a car loan. Please clarify
What about 0% interest contracts where there is an intermediary (usually a bank) sitting between you (the consumer) and the bussiness (the seller) that pays the money upfront to the bussiness on behalf of the consumer?, is the bank making interest off of the bussiness by taking a % of the final price even tho you as a consumer are paying 0% on top of the advertised price?, Jazzaka Allahu Khairan brother. Example: a smartphone advertised at $1000 price tag where the bussiness is letting you take it on a 10 month period at 0 % interest (by the end of it, no penny is paid above $1000), but the purchase is asked to be made through specific banks/payment rails like Klarna for instance.
Slm. As questioned by Sheikh Imran Hosein, why should i buy car from bank which is so expensive compared to market price? Becoz bank sell at credit price, not market price. In Islam, market price and credit price should be the same or else Riba.
That is not true. You can buy something on installments at a higher price than paying spot. You need to choose which price and duration you are going for at the start.
It is haram, because you are still in the context of riba since you're getting a value of money way more than what you actually paid to the insurance company which will be flowed and processed in some way to get the value of money you get back and use it when you pay through insurance. You can find a video made by Assim al hakeem whom explains it more deeply. May Allah reward you for your question🤲🏻
How about if the 0% interest free offer is only for a limited time period, meaning for example for 4 years, does this make the contract Harram, because it will be based on interest after all?
Not necessarily; the offer may contain a discounted price subject to payment in 4 years, otherwise standard price might be charged i.e. also a fixed one, notba variable... E.g. a commodity is proced 100 £... But if someone pays in cash, 5% discount available... For deferred payment in 6 months, the standard price is 100, but there should not be a thordnoption!.. my opinion only
@@thesolutionsuggested5152Jazaka Allah Khairan for your input. However, when I researched car purchasing a few years ago, I discovered that late payment penalties are prohibited (haram) in Islam. Additionally, multiple seller contracts are also not permissible, indicating that the dealer may not be the sole owner or the vehicle is financed. It became clear to me that these interest-free offers involved Riba and were prohibited, so I opted out. Alhamdulillah, I borrowed and saved money and Allah blessed my savings, enabling me to purchase a car that I still own today. And Allah knows best.
what about savings account? our money in the bank is being eaten up by inflation. Even with a savings account, the rate offered is at 4.5% while inflation is lets say 9% you are losing money either way when you have the savings account or just by simply leaving it there in your bank
In a trade, if I sell something worth of 1 dollar and the buyer said i will pay you after 10 days, I said then price will be 2 dollars (price change for later payment), is that Riba ? Its not money for money but money for a commodity
@@thajudheen1 it’s not Riba. You and buyer are free to negotiate as you wish regarding price and other details - as long as one price is locked in at the end of negotiation.
@@AlmirColan It means if car company itself is giving us the EMI option it's okey? Eg: 5000 worth of car , 5 EMI of 1100, Total will be 5500 after paying 5 EMIs, is this Okey? But if buy it for ready cash It will be 5000 only.
@@AlmirColan Thank you for your patience and timely response, Isn't this the case with EMIs, same procedure happens when we buy a car on EMI? Finance agencies are buying the car from company and selling to us for more money because of late payment. If we stop paying EMI in between they will come and seize the car, it means car belongs to them until we finish the EMIs. This is trade in that sense, right? Not money for money (Only if they don't charge extra for payment missing as per your last answer) Please answer
I wish did made sense to me. But I can’t get my head around it. It’s like telling the dealership to just call it sale so that it will be halal for me. I’ll tell the dealership: Just hide the interest in the selling price and we’re good to go. Oh wait don’t tell me that just do it, otherwise it will be haram. 😅
You misunderstood the point. It might be funny to you, and you can trivialize any matter like that. Someone might say, what is zina and what is marriage, and what makes it halal? Is it just some words we say? It's better to learn about the difference between trade and riba. I recommend this - ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-18FJgXjqW0w.html
How about building a nasjid with riba, i personally know people (organization) that took a loan from bank in the USA and purchased the building for masjid. Me personally never stepped my foot in that building but i was criticized and call names because of my stance.
@@Curious1598 here is little bit about my journey into Islamic finance ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-ByT-dj7iEG8.htmlsi=te6mbO4ZdthdLVB0
Islamic banking is backdoor Riba. Let me explain. Why would someone buy somethig at higher price when market price is lower for any product from institutions like islamic banking even tho money from money isn't involved just like he said? They are giving us time. Time is money. Making money from time is the classical definition of Riba. If you are paying now for this product pay X.. if not...pay Y at later date for the same product. Its clear Riba
Unfortunately many of our ummah still consumed them yet when it comes to pork and alcohol they immediately went nuts. Not knowing riba is just as same with those both.
Unfortunately, many people don't understand the difference between sale and riba. They think that sale is riba and riba is sale. Look at this verse from the Quran where Allah speaks about people who say these two are similar: "Those who take ribā (usury or interest) will not stand but as stands the one whom the demon has driven crazy by his touch. That is because they have said: “Sale is but like ribā.’’, while Allah has permitted sale, and prohibited ribā." (Qur'an 2:275)
@@AlmirColan Exactly, brother. Having business and sales is obligatory because its part of akidah to earned rizq in halal way including contribution to society and Allah dislike lollygagging(lazy) people who don't work. Even the Prophet PBUH have his own trading and business during his(PBUH) lifetime. But the fact that today our ummah and non muslims alike, don't consider riba is an exploitation, much like cheating, to earn wealth is just absurd. Then they complain why rich people keeps getting rich and poor getting poorer. If only they knew...but arrogance and ignorance is too bliss for them.
Salam Wa Rehma Please inform about people who want to expand there businesses & that can only happen with cash. How to go about it. & please do not mention the Classic picture of borrowing it from Friends & relatives No One is out there to give you anything at all. Many Thanks
What about home? We need home and some scholars say if it is for living arrangements then it is fine as you are buying to keep roof over your head - not making money. We need Islamic empire with Islamic banking system.
I sure understand your point of view and interest as an employee of an islamic bank in Australia - MCCA. You cannot have islamic vodka. Banking is by nature a fraudulent thing (money created by commercial banks out of nothing). Then we cannot have an islamic version of that. That's inescapable conclusion. To create money out of nothing and then finance people and saying that you are financing people without charging interest is false assumption. There are two same essential problems that we have in the secular base banking system and in an islamic banking system. Until we have islamic financial institutions that do not create money from nothing and that when they use that money for their customers they provide it to their customers in a way that is not interest based. It could be a profit sharing contract or it could be that the islamic payments company builds a house and then sells it on installments, because there cannot be usury in a goods for money transaction. That's a principle of islamic law. For example, if a bank sells you a house for 150 000$ payable over 10 years, that's fine 'cause that's an installment sale and that's been accepted. What islamic banks tend to do is they say you want to buy a house, we will buy this house for 100 000$ as long as you buy it from us for 150 000$. So I take that house and all contracts are signed, the bank transfer it to me and I pay 150 000$ over 10 years. What effectively has happened is that the bank have given a 100 000$ there in return for 150 000 later from me. Now that process all bundled up in one transaction has the same cash flow reality as a loan of a 100 000$ in return for 150 000$ later. It's interesting because that's exactly how the early Christians got around their prohibitions on interest as well through the contractum trinius. They had a system of combining contracts. In islamic banking today it's almost the same thing - you promise that if the bank buys you buy from the bank. So promise (contract one), bank buys (contract two) and I buy from the bank (contract three). All this bundled up into one contract creates the same cash flow reality for an islamic bank that they are interest based bank - will have lend a 100 000 there in return for 150 000 later from me. Now, whatever you call this in terms of names the cash flows are the same as in a commercial bank and that is the essence of usury. 90% of what's going on in islamic banking is this kind of financing.
Brother, increasing the price of something because of delayed payment is riba. Please provide evidence where Prophet (pbuh) allowed this. We are living in different times so even scholars don't understand what is riba.
Inflated price of something and assuming it that it is not riba is also riba. You can not find an excuse to bypass the laws of ALLAH . Just stay away from riba
So you are saying that buying a product for 100 and selling it for 110 is riba? What is trade then? What is every business owner doing? It would be better to learn about riba before talking about it... see ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-18FJgXjqW0w.html
Is there a cost to money? How do you reconcile inflation with interest when fiat currency and modern economics means that the value of money is eroded over time. Also, if we are in Darul Haram then could the economic system be considered anti Islam and of so is the prohibition on interest more nuanced. For example if I have $1000 and leave in the bank and come back in a years time and do not take interest the value of my money has gone down by inflation. If I was to take interest at the same rate as inflation I have effectively preserved my money. Is this RIBA or a Muslim having to operate in an economic system that is not governed by Islam?
In Islamic banks there nothing called zero percent. They also charge percentage but they do not call it interest. There is nothing free and there should be nothing free.
Very "interesting ' if you pardon the pun. Why is that the Qur'an talks about giving and taking credit in surah 2? There seems to only one statement in the Qur'an describing 'riba'. It seems that it is all about the exploitation of a borrower, when he cannot pay back the loan. Thus the lender starts making extortionate demands for re payment of the loan, the method commonly used by loan sharks and gangsters. A proper credit agreement with the loan company does not necessarily have to be riba. Take a good example, student loans. These are normally paid back over 30 years and in the UK students only start paying back when they reach a certain salary.
@@AlmirColan brother, I have no idea what you are talking about. Usury or Riba in the Qur’aan is about exploitation of the borrower. There is no particular monetary system in Islam. 1400 years ago it was coins. Today it is paper or computer transactions.
Dont plz use terms not understable for layman; my opinion only! The riba thing is a problem across world, and the knowledge you want o share, should be delivered in a simple way and language
I know the people who give lectures on it itself involved in it or enough rich they did no need riba...but they even don't help poor middle class...stay away from Thier problems.. So just they keep u where u r....😂
Assalamualaikum brothers and sisters! Paper money=note money=printed money=Fake money=not money. "Real money is gold and silver, not printed money=real value. As an ummah we go back to Allah 's system which is sound money.
Yeah it makes zero sense. The supposed riba you can refinance seek lower rates etc. claiming riba causes inflated prices but this supposed halal way actually just puts the riba interest upfront as a profit, which in riba it basically is the same but it’s refinanable and you can end up paying 125 instead of 150k. And both would give you almost the same period of time to buy the car ex: 4 or 6 years and calculating the whole amount paid over time it’s identical, so basically it’s just jokes on Muslims who want the supposed halal way of buying assets.
It seems like you are mixing up riba and trade. In trade, profit is permissible. I hope you understand the difference. See this video about rules and types of riba for clarification if you have not studied the matter - ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-18FJgXjqW0w.html
So when the bank buys the car from the dealer at $100k and then sells it to me for $150k at 0% interest then this is considered halal? Just trying to wrap my head around this. Thanks.
@@ahmadou4 This is a very interesting point brother. Can you confirm your understanding that if on paper the bank never took ownership and the ownership passed directly from the dealer to the consumer then the bank has only facilitated money and that becomes riba? I ask because I cannot wrap my head around this issue.
@@AlmirColan but that means the bank don't really embrace risk. The bank charge $50k just for the transaction and they will definitely get that $50k. Is that really business/ trade. I feel like if i do that, i can only gain profit and never suffer loss, so i conntinue to get richer and richer.
Honestly i didnt find the video very helpful in making a decision whether to finance a car in Canada or not, truth is that even with zero percent financing there is an element of interest in the final price of the vehicle you wish to purchase, also the final deal is with the financial institution so at the heart of it, it will always be a loan with interest attached to it....the only way to realistically purchase a vehicle the halal way is paying cash...all other alternatives are just fooling yourself that X or Y is halal. A sale transaction would be if future payments are being made to the car dealership which isnt the case....again i am no scholar but that is my brief research on this
There is a saying...If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck Same too with riba, disguised by many muslims and islamic finance with fancy names such as profits or rents. Take so-called islamic mortgages as an example. Rent part of it goes up and down, when interest rates go up and down. If it is genuinely riba-free mortgage then this should not happen But it behaves the same as interest based mortgages. So it is riba based no matter how you justify it Same as some muslim car dealers offering interest free credit. But the prices of their cars are considerably more than market value. Their markup, accounts for the interest as the price overall is the same as getting a car at market value and paying the extra in interest over the years. This is nothing but deception. Using fancy names to show sales and transactions are riba free, when they are disguised This caused the downfall of Christians. We muslims are following suit.
You are entirely wrong. Rents and property prices do go up based on demand on supply and not directly from interest rates. I assume you are not a landlord or a tenant to know this! An Islamic bank becomes your part landlord when you takeout a house loan and they have the right to increase rent just like any other landlord
@@farahmo4519 Im afraid, it is you who are wrong. When you buy a property using Islamic finance, you don't own the property outright. But the bank does. So the bank is kind of the landlord or property owner, until you've repaid him in full. So, while it appears, you are justified to pay the finance company the rent, you forget 2 things This rent goes up and down, as interest rates go up and down. More to the point, and the tell-tale sign and the give away that this is a disguised western mortgage, is that when you take out an islamic mortgage and the finance company owns the property, then explain why the buyer is 100% responsible for the difference between the loan and the property price if the house price drops. The buyer doesnt own it, but he is expected to cough up the difference when selling the house when house prices have dropped. It should be the landlord who swallows this. But the buyer suddenly becomes 100% responsible. What happened to the landlord in this case ?. Don't give this nonsense that it is to be competitive with ribs based contracts. There is no difference in behavior between a so called islamic mortgage and a conventional western mortgage. Both operate in the same way, as far as end user and contracts are concerned, except one has nice Islamic words. And that's the deception. Don't believe me ?, even western financers who have done degrees will agree. I know, i spoke to them and they say there is no underlining difference The islamic mortgage is taking a riba based mortgage and adding islamic terms. Bit like taking haram meat, adding bits of halal meat and selling whole product as 100% halal meat. Sorry, its still haram. No such thing as a halal swine.
@@farahmo4519 They have, where i live. In a Western country. And there are plenty of scholars and muslims who share the same views as me, and have discussed this so called islamic finance. Some muslims, with practical experience who took out islamic finance, say its the same to the end user as a western finance. Even student loans, if you go with islamic alternatives, you end up paying the same If you choose to listen to others, that's your decision. But i see disguised riba even if you dont
@@SultanOxford in Islamic finance you and the bank are both owners of the house proportionate to your shareholding. Say a house is 100k and rent on the market is 1k. If you have 20k share, bank has 80k. You pay the bank rent of 800 as you also pay the bank out of their portion. Simple as that. If at all you get into financial difficulty, the bank works with you to offload the house and you get your proportion back after costs. If you are against this arrangement, which one do you propose??
@@farahmo4519 It's an Islamic video. Give you a break from what exactly? You're not the one recording and posting this. It took you more effort in posting this reply. You could've given yourself a break.
@@farahmo4519 he literally talks about riba. He's talking about something that pertains to Islamic finance. I am not telling him what to do; I am requesting to not put music.
@@tashrifapon6519 Prohibition of riba isn't exclusive to Islam though. If he was talking about Allah, the Prophets or Ahlulbayt then we can allow your request since those are exclusive to Islam
