Rules of Buying and Selling on Installments
Sale on Installments
Question: What is Islam’s view on sale on installments, given that it is known that in the case of sale on installments the price is higher than the price of a cash sale?
Answer: By the consensus of the scholars, there is no harm in a person buying an item he needs on credit and then, if he wishes, paying it in one lump sum or paying it in various installments; there is no objection to this. Several scholars have reported the consensus of the scholars on its permissibility.
It is also known that if a sale is made on installments, its price will also be higher, because the seller will not sell an item whose credit price equals the cash price of something. The permissibility of this transaction is one of the virtues of Islamic Shariah, because the seller benefits from the higher price, and the buyer finds it easy to pay the price on credit. But if the deal was settled at a cash price, and then the buyer comes to the seller and says: Increase the price and give me a respite, that is, raise the price and give it to me on credit, then this is not permissible, because it is riba. For example, a person sold a car to someone for ten thousand, then the buyer could not get ten thousand and came to the seller and said: I could not arrange ten thousand, but you give it to me for twelve thousand on credit. This is not permissible, because in this situation the buyer’s liability to pay ten thousand has already been established; now increasing it in exchange for a respite is exactly riba, so it will be haram.
