Ilm Summit 2010: Notes, Photos, and Gems!

[Adib Contractor]

Notes: Islamic Business and Finance - Part 3
(attached)

[Abu Rumaisa]

Buying and selling: Can take into account the time value of money. For example: You sell something to someone for $50, but they need to pay over time. So you say fine, you will pay me a total of $100 over two years. This is valid and acceptable, as long as the fixed price of $100 total is agreed upon.

How is this different from how car loans happen here in the west? I can buy a $20,000 car but if I take a loan for 2 yrs at 10% rate then I end up paying $22,150. Based on the monthly payment I m going to make each month... I know my total amount!

In riba based loans if I make larger payments than required then I would end up paying less, in 'Buying and selling' do I have to pay the fixed amount even i make higher payments... there's an early payment penalty?

Is it possible to provide the evidences for 'Buying and selling'?

Jazak'Allah Khair

[bint_habibullah]

Originally Posted by Adib Contractor

That is the same person, related through two different chains. I suppose that Malik was an earlier ancestor of his.

I see. Learn something new everyday alhamdulillah.

[Adib Contractor]

Notes: alBid'ah and Its Rulings in Islam - Part 3
(attached)

[Adib Contractor]

Originally Posted by Abu Rumaisa

How is this different from how car loans happen here in the west? I can buy a $20,000 car but if I take a loan for 2 yrs at 10% rate then I end up paying $22,150. Based on the monthly payment I m going to make each month... I know my total amount!

In riba based loans if I make larger payments than required then I would end up paying less, in 'Buying and selling' do I have to pay the fixed amount even i make higher payments... there's an early payment penalty?

Is it possible to provide the evidences for 'Buying and selling'?

Jazak'Allah Khair

I'm not sure how this works exactly. Does the loan entail them giving you money, and then you pay them back more money than they loaned you?

[A.Yusuff]

Jazakum Allahu Khayran bro !!

[Thirst For Knowledge]

Brother Adib, Jazakallah Khair for the notes. Awesome stuff.

[Abu Rumaisa]

Originally Posted by Adib Contractor

I'm not sure how this works exactly. Does the loan entail them giving you money, and then you pay them back more money than they loaned you?

I think the way car loans work is u set a purchase price for the car - $20,000 and then borrow $20,000 from Financing dept or a bank they have a link with. The money is directly paid to the dealership & depending on the interest rate & time length.. monthly payments r set (the amt is usually set when u r negotiating the deal, the interest rate & term r sometimes part of the offer).

[Adib Contractor]

Originally Posted by Abu Rumaisa

I think the way car loans work is u set a purchase price for the car - $20,000 and then borrow $20,000 from Financing dept or a bank they have a link with. The money is directly paid to the dealership & depending on the interest rate & time length.. monthly payments r set (the amt is usually set when u r negotiating the deal, the interest rate & term r sometimes part of the offer).

As discussed in the notes, having any haram condition makes the contract invalid. Thus, having stipulations of interest makes this loan a haram loan. The fact that the dealer is paid directly does not matter -- because this is the same as transferring debt (you owe the bank/finance-dept instead of the dealership directly), but it is still a loan with interest.

The difference between the other situation is that there is no notion of interest. You have no loan in that case, it is simply paying off a pre-agreed amount in installments. There is only a one-way transfer of money, buyer to seller.

[Adib Contractor]

Notes: Tarbiya - Part 7
(attached)