Shariah Ruling on Purchasing Items in Installments and Its Conditions
Question:
Is it permissible to purchase items on installment? Can it be done through a bank or from other sources? Kindly provide Shariah guidance in this regard.
Answer by: Shaykh Hafiz Khidr Hayat (حفظه الله)
There is a scholarly difference of opinion on the issue of purchasing items on installment. However, according to the opinion of our scholars and respected teachers, installment-based transactions are permissible under two essential conditions:
That is, when the buyer and seller enter into the agreement, the price must be clearly defined and agreed upon.
There must be no ambiguity or conditional clauses allowing for an increase in price later.
If the buyer delays in paying an installment, no extra charge (such as a fine or interest) should be imposed.
If both of these conditions are fulfilled, then purchasing through installments is permissible in Shariah.
However, if either of these conditions is violated, the transaction becomes impermissible (ḥarām).
Most banks and financial institutions do not abide by these conditions, and they impose interest or penalties on delayed payments.
Therefore, before buying anything on installments from such sources, thorough verification must be done to ensure that the transaction is free from interest and other non-Shar‘i conditions.
Question:
Is it permissible to purchase items on installment? Can it be done through a bank or from other sources? Kindly provide Shariah guidance in this regard.
Answer by: Shaykh Hafiz Khidr Hayat (حفظه الله)
There is a scholarly difference of opinion on the issue of purchasing items on installment. However, according to the opinion of our scholars and respected teachers, installment-based transactions are permissible under two essential conditions:
❖ ① The Price Must Be Fixed at the Time of Sale:
That is, when the buyer and seller enter into the agreement, the price must be clearly defined and agreed upon.
There must be no ambiguity or conditional clauses allowing for an increase in price later.
❖ ② No Penalty for Late Payments:
If the buyer delays in paying an installment, no extra charge (such as a fine or interest) should be imposed.
If both of these conditions are fulfilled, then purchasing through installments is permissible in Shariah.
However, if either of these conditions is violated, the transaction becomes impermissible (ḥarām).
Purchasing Through Banks or Other Institutions:
Most banks and financial institutions do not abide by these conditions, and they impose interest or penalties on delayed payments.
Therefore, before buying anything on installments from such sources, thorough verification must be done to ensure that the transaction is free from interest and other non-Shar‘i conditions.
