Do not sell what you do not have

Question :

What is the ruling on selling loans by way of buying and selling products while they are in their place? This method is followed by some of the people in their loan transactions in the current times.

Answer:

It is not permissible for the Muslim to sell a product for cash payment or delayed payment, unless the person owns the product and he actually possesses it. This is due to the statement of the Prophet to Hakeem bin Hizam:
"Do not sell what you do not have."

This is also due to his statement in a Hadith of 'Abdullah bin 'Amr bin Al-'Aas:
"It is not permissible to make a loan and a sale (in one transaction), nor selling what you do not have."

This was recorded by the Five with an authentic chain of narration. Likewise, the one who bought the product may not sell it until he also has it in his possession due to the two mentioned Hadiths. This is also due to what Imam Ahmad and Abu Dawud recorded, and Ibn Hibban and Al-Hakim graded it authentic, on the authority of Zaid bin Thabit. He (Zaid) said, "The Messenger of Allâh prohibited that products be sold where they are bought until the merchants (who bought them) move them to their places." Likewise, Al-Bukhari recorded in his Sahih from Ibn 'Umar that he said, "Verily I saw the people in the time of the Messenger of Allâh buying food and they were prevented from selling it in its place (of purchase) until they transported it to their places."

The Hadiths with this same meaning are numerous.

Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 3 Pages 353-354