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Fatwa CenterSelling silver for a delayed price
Question
Asalamu alaikum, I am doing some research about Islamic solutions to student loans and wanted to ask if this is permissable. For example, If the Lendor has a $1000 (market value) of silver and a student is in need of $1000 to pay for school, can the lendor sell the silver for $1200 ($200 in profit) to the student, who will himself sell the silver for market value ($1000, or whatever price he can sell it for) and then be in debt $1200 to the lendor? In the end, the Lender is owed a fixed $1200 by the student and the student has $1000 (or whatever price he can sell it for) to pay for his school, house, etc. This $200 would not be considered Riba because it is in fact a profit based on a the sale of an actual asset. Jazakallah Khair
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
Selling silver for a delayed price is not permissible as this is considered as Riba for the delay in payment, and this ruling applies whether the currency is dollar or else. However, if what is sold is a real goods that is neither gold nor silver nor currency, then it is permissible to sell it at a higher price than its real value for a delayed time because time has a share in the price.
Then, if the good is possessed by the buyer, it is permissible for him to sell it for other people than the seller at any price he wishes. This is what is called “Tawarruq” as the buyer does not need the goods but he needs its price, and we have clarified the conditions of Tawarruq in Fatwa 90815.
Tawarruq and Muraabahah and the like are considered among the Sharee’ah-compliant transactions instead of Riba (interest and/or usury) since both parties of the sale contract achieve their target: the seller gets the profit and the buyer gets what he wants without resorting to Riba or forbidden transactions. Indeed, Allaah permitted trade and forbade Riba.
Allaah Knows best.
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