All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon Prophet Mohammad and upon all his family and companions.
There is no sin in buying and selling goods through installment payments, even if the installment price is higher than the cash price. The majority of scholars from the four main schools of thought have agreed on the permissibility of this type of sale. They based their ruling on the hadith of Aisha (may Allah be pleased with her), in which she said: "Barirah came to me and said: "My people (masters) have written the contract for my emancipation for nine Awaq of gold to be paid in yearly installments, one Uqiyya per year." [Agreed upon]. This arrangement represents installment sales, and the Prophet Muhammad (PBUH) approved it. Al-Imam An-Nawawi (may Allah have mercy on him) said: "If one says: "I sell it to you for 1,000 (in cash) or for 2,000 (on credit)," or says: "I sell half of it for 1,000 and the other half for 2,000,’ the contract is valid." [Rawdat At-Talibin/Vol.3/P.397].
The permissibility of installment sales is subject to the following conditions:
1. Fixing the Price at the Time of Contract:
Once the sale is concluded, the price must be clearly determined—either the cash price (immediate payment) or the installment price. It is not permissible to keep both options open without specifying one.
2. Defining the Payment Term:
The due dates for installment payments must be clearly specified to avoid uncertainty (Gharar).
3. No Additional Charges for Late Payment:
If the buyer delays payment, no extra charges or penalties should be imposed, as any increase over the original debt is considered Riba (usury).
4. No Discount for Early Payment as a Condition in the Contract:
The contract should not include a pre-agreed discount in case of early repayment.
Note:
This response provides general guidelines on installment sales and is not a specific fatwa for a particular contract. And Allah The Almighty Knows Best.
