Is buying on credit or in instalments halal?
A sale on credit is a sale, not a loan. The price may be higher than the cash price because time has a share in a sale, but it must be fixed at the start and can never rise. Once the amount you owe grows because you are late, the sale has turned into a loan at interest.
The guidance
What are you paying for, and how?
- A real item at a fixed price, even if higher than the cash priceHalal · Trade · Hadith 2 & 4Buying an asset on deferred payment is allowed, the deferred price may be higher than the cash price, and a fixed price removes ambiguity. This is a sale, not a money loan.This does not cover gold, silver or currency, which must be paid for on the spot.
- The amount I owe grows the longer I take to payHaram · Riba · Qur’an 2:275A debt that grows with time is money being charged for money. Once the price can increase for delay, it has become a loan at interest. That is riba.
People also ask
Why can a shop charge more for instalments but a bank cannot charge interest?
Because the shop sells you an item and prices it; the bank sells you money for more money. Scholars explain the hadith on two sales in one: “ten in cash or twenty on credit” is wrong only if you leave without settling on one. A fixed credit price is allowed.
Is a phone contract with monthly payments halal?
If the phone is sold to you at a fixed total price paid monthly, with nothing added for late payment, it is a credit sale and allowed. A contract that charges interest on the outstanding balance is riba.
Can I buy gold or currency in instalments?
No. Gold, silver and currency must be paid for on the spot. Instalments are for other goods.
Is it riba if the seller gives a discount for paying early?
A discount promised in the contract for early payment trades time for money and is not allowed. A discount the seller freely gives when you pay early, with nothing agreed beforehand, is a gift. See paying a debt early.
Related questions
All questionsThe four schools on riba
This guidance follows the Hanafi school as applied today by Mufti Taqi Usmani and the AAOIFI standards. Notes mark where the Maliki, Shafi’i or Hanbali schools differ. The four schools on riba →