Sunday, 14 June 2015

Instalments is permissible but increasing price for dealyed payment is differed upon

Q 1: I bought some sheep fodder from a society on credit. I paid a portion of the price and the rest is to be paid in installments on fixed dates. Those in charge of the society stipulated in the contract that if I delayed the repayment, they would increase the amount by 5%. Is this increase

(Part No. 13; Page No. 339)

Riba (usury)? It is worth mentioning that they call this additional amount 'indemnity for repayment delay.



A: This condition is Batil (null and void), as it falls under Riba that prevailed during the pre-Islamic days. Whenever the repayment was delayed, the amount used to increase. Thus, this sale is Batil at the very start and you should avoid it. Allah (Exalted be He) says: ...whereas Allâh has permitted trading and forbidden Ribâ (usury). This is a form of Riba.


May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.
MemberMemberMemberDeputy ChairmanChairman
Bakr Abu ZaydSalih Al-Fawzan`Abdullah ibn Ghudayyan`Abdul-`Aziz Al Al-Shaykh`Abdul-`Aziz ibn `Abdullah ibn Baz
 Shaykh Ibn Baaz was asked about the ruling on increasing the price in return for delaying payment, He said:
There is nothing wrong with this transaction because paying cash for the product is different from delaying payment. The Muslims are still doing such transactions and this is like consensus that it is permissible. Some scholars held an odd opinion and said that it is not permissible to increase the price in return for delaying payment, and they thought that this was a kind of riba, but this is a baseless view. It is not a kind of riba at all, because when the dealer sells the product to be paid for later, he agrees to the delay so that he may benefit from the increase in price, and the purchaser agrees to the increase so that he may take his time and because he is unable to pay the price in cash on the spot. So both of them benefit from this transaction. There is a proven report from the Prophet (peace and blessings of Allaah be upon him) which indicates that this is permissible; he commanded ‘Abd-Allaah ibn ‘Amr ibn al-‘Aas (may Allaah be pleased with him) to equip an army and he was buying one camel for two camels, to be handed over at a later date. Moreover this transaction comes under the general meaning of the verse in which Allaah says (interpretation of the meaning):
“O you who believe! When you contract a debt for a fixed period, write it down”

[al-Baqarah 2:282]
This transaction is one of the permissible kinds of debt that are mentioned in this verse; it is also akin to forward buying (bay’ al-salam).
Fataawa Islamiyyah, 2/331
See Bay’ al-Tasqeet by Dr. Rafeeq Yoonus al-Masri 





No wrong in selling by installments


Q: Someone bought a GMC vehicle from another person. It was valued at 40,000, but he paid 70,000 for it in installments. Is this permissible?

A: There is nothing wrong in this, because the owner of Barirah (may Allah be pleased with her) agreed with Barirah that she would buy her own freedom in installments; for an Uqiyyah (1 Uqiyyah = 40 Dirhams of silver = 119 grams) every year for nine years. This payment in nine yearly installments was agreed to during the time of the Prophet (peace be upon him), and he did not object to this.

There is no harm in buying by installments if it is for a fixed sum, term and description, according to the abovementioned Hadith, and based on the general evidence, such as Allah’s Saying: ...whereas Allâh has permitted trading and forbidden Ribâ (usury). If you buy a car for 40,000, 30,000, or more or less, on basis of fixed-term installments, for instance 5,000 or 8,000 a year, or 1,000 a month, there is nothing wrong in this.
The Permanent Committee for Scholarly Research and Ifta'
The seventh question of Fatwa no. 19479

Q 7: Is it permissible for Muslims to buy a car or house furniture by monthly installments, bearing in mind that default on payment of installments at the end of payment period causes an increase in the value of the bought object? In fact, I heard many Muslims object to it.

The Fiqh Council in the Kingdom of Saudi Arabia permitted buying a car or house furniture by installments. Is it sound? Inform us, may Allah reward you good!



A: It is permissible to buy cars, furniture or any other commodity on credit for a price higher than that paid in cash, provided that it is paid by defined installments at defined times. Allah (Exalted be He) said, O you who believe! When you contract a debt for a fixed period, write it down. Allah (Exalted be He) also said, ...whereas Allâh has permitted trading which includes both in cash and on credit sale, were it by installments or otherwise.


May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.

The Permanent Committee for Scholarly Research and Ifta'

Member Member Deputy Chairman Chairman
Bakr Abu Zayd Salih Al-Fawzan `Abdul-`Aziz Al Al-Shaykh `Abdul-`Aziz ibn `Abdullah ibn Baz


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