Home » Hanafi Fiqh » Askimam.org » I’m starting a Finance Company. The funder is lending money interest free. What do i need to follow in obtaining money? he wants to charge a fee for use of the money provided

I’m starting a Finance Company. The funder is lending money interest free. What do i need to follow in obtaining money? he wants to charge a fee for use of the money provided

Answered as per Hanafi Fiqh by Askimam.org

the money is being lent to me by a non-muslim interest free, and he wants to charge a fee for use of the money provided. The fee will be an ongoing fee until the debt is paid out. The total amount payable will be fully disclosed and repayments and charges will be set. Is this allowed? The other option is for us to buy the house for the client and onsell at a higher price where we have an agreement with the client to pay the money back to us at a set rate, for example, if we buy the house for $100000 and sell to clent for $130000, with set repayments and administrative charges. This way both the funder and the company can make some profit from the money lent. If both of these options are against Islamic rules, what way am i able to obtain the money from the funder, and in which way can both the funder and the company make profit from this? Also please visit www.iskan.com.au and tell me what you think of their method of finance

Answer

The charging of a fee on the loan is also interest. That is not permissible.

The second action, to purchase a house and resell it at a mark up is permissible. The non-Muslim and you may enter into a partnership of Mudhaarabah where you use the funding to purchase and sell houses at a profit. This is how may Islamic Banks operate. Remember, there must be a risk factor also involved in you purchasing the house for resale. Your client have the right to refuse the purchase of the house.

and Allah Ta’ala Knows Best

Mufti Ebrahim Desai

Original Source Link

This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

Read answers with similar topics: