Islamic Fiqh > Financial transactions > Murabaha and riba-free credit
Buying on credit without interest: murabaha (sale at a known marked-up price), its conditions and the clear line with interest loans.
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Updated on 31 August 2026 at 3:55 AM
The murabaha is a sale at a stated cost plus a known profit; the tawliya sells at the exact cost without profit, and the wadi'a at the cost with a stated reduction. at-Tabari reports their agreement that the murabaha sale is lawful, and Ibn Qudamah holds it valid without disagreement and without any reported dislike of its principle. The tawliya is Prophetic: Abu Bakr had prepared two camels; the Prophet said: "hand one over to me"; Abu Bakr offered it free; he answered: "not without a price", and he took it at its price (al-Bukhari 2031).
The murabaha is a sale of trust: the buyer relies on the seller's word about the original cost. The seller must state the purchase price and the profit; the Malikis add the duration of holding. Hiding or lying about the cost is a betrayal: "whoever deceives us is not one of us" (Muslim 101). When the deceit appears: the Hanafis differ, Abu Yusuf deducting the deceitful margin while keeping the contract, Abu Hanifa and Muhammad giving the buyer the choice; the Shafi'i school reduces the sale to the cost and a lawful margin; the Malikis give the buyer the choice between keeping and returning.
ash-Shafi'i in the Umm validates the murabaha ordered by purchase: a man asks another to buy a good so as to resell it to him with a profit; the first buyer keeps his option on the first sale. But when the parties make the promise binding in advance, the structure breaks: it becomes a sale of what one does not yet own. The Malikis rank the banking form, built on a binding promise, among the 'ina sales forbidden in the law, and they forbid the scheme where the buyer takes a good bought at ten to pay twelve deferred: it looks like a loan of ten repaid twelve.
The frontier of the chapter is the verse "Allah has permitted trade and forbidden riba". Malik fixes the rule with a figure: a man owes a hundred dinars deferred; his creditor has him buy a good priced one hundred now for one hundred fifty deferred: "this is a sale that does not stand"; the hundred kept and the fifty added are money grown by money. Profit on goods actually owned and delivered, at a stated cost, is trade; an increase on money lent or owed is riba.
Three checks keep a deferred sale honest: the seller owns the good before reselling it, the cost is stated truthfully, and the price is fixed once, with no penalties growing the debt.
Structurally yes: the bank buys the asset, owns it then resells it to you at a known price; credit lends money for a supplement (riba).
Per contract: remaining capital balance or total price; no penalty enriching the lender per the academies (the fine goes to charity).
The risk exists: check the bank's real ownership, cost transparency and absence of guaranteed rate on money.
Ijara (lease-to-own), musharaka mutanaqisa (diminishing partnership) and salam: see the corresponding pages.