Answered by SunniPath Answer Service Team
I live in the US and there are several ”Islamic Finance” companies here which offer a diminishing partnership payment plan (which you are probably familiar with by now). The system does not use interest but the way it is structured in my locality, you end up paying tens of thousands dollars more than if you were to pay the usual way with interest. My question is since the main reason for the impermissibility of riba (interest) was so that sellers would not rip off their buyers wouldn’t this finance system (in which you sometimes pay double the actual value of the house) be haram for the same reason (buyers getting ripped off).
In the Name of Allah, Most Merciful & Compassionate
Please see the following links in answer to your question:
Why is Riba, such as bank interest, forbidden? Are there alternatives in Britain?
Markups and riba
Understanding Two Key Concepts
“It is not denied that rulings change as times change…” Allama Ali Haydar on Customs and Habits & When They May Influence Rulings of Sacred Law
Wassalam,
SunniPath Fiqh Team