This form of sale is forbidden
19-7-2011 | IslamWeb
Question:
I have an amount of money which I want to invest in business through selling cars by installments. Therefore, I went to the owner of a car showroom and informed him of my desire to give him the money so that he could buy cars for me and sell them to trustworthy people and get the price by installments, on the condition that I will provide him every month with an amount of money. However, I fear that the owner of the showroom will not buy the cars to be in my possession, because someone might come to him to buy a car by installments and then sell it in cash, as many people do. He will register a fake sale and tell the buyer that he has sold him a car and that there is someone who wants to buy it, while the car does not exist, and then the buyer will pay him the price in cash. Is that permissible? I do not really know, but I fear that he will do so, and I do not want to enter into forbidden sales or get involved in Ribaa (usury or interest).
Please advise, and may Allaah grant you success.
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, sallallaahu 'alyhi wa sallam, is His slave and Messenger.
As long as you have suspicions that the owner of the car showroom makes forbidden transactions, then you should verify that these are true before you deal with him. If it becomes clear to you that he is not what you suspect him to be, then you may deal with him. If it turns out that he does get involved in the forbidden dealing that you have mentioned, or in any other forbidden dealings, then it is not permissible for you to deal with him, because you would then be cooperating with him in sin and aggression. Allaah The Almighty Says (what means): {And cooperate in righteousness and piety, but do not cooperate in sin and aggression.} [Quran 5:2] The consequent profit will be ill-gotten and void of any goodness.
In addition, the form of sale that you have mentioned is forbidden for two reasons:
First: It involves the sale of ‘Eenah, which is to buy a commodity from a person on the premise of paying him later on and then selling it to him immediately for a lower price provided he pays in cash now. It was narrated on the authority of ‘Abdullaah ibn ‘Umar 
that the Messenger of Allaah, sallallaahu ‘alayhi wa sallam, said: “When you conduct the ‘Eenah sale, hold on to cows’ tails, get content with farming and abandon Jihaad, Allaah will strike you with a humiliation that He will not remove from you until you return to your religion.” [Abu Daawood and Ahmad]
Second: By means of this kind of sale, one sells what he does not possess. It was narrated that Hakeem ibn Hizaam said, “O Messenger of Allaah, a man would come to me seeking a commodity that I do not possess and therefore I buy it for him from the market.” The Prophet, sallallaahu ‘alayhi wa sallam, said: “Do not sell what is not in your possession.” [Abu Daawood and An-Nasaa’i]
Allaah Knows best.