Question
There are a lot of companies which sell their things on by-part payment. And they have taken more then the original price. In this way i want to buy a motorcycle whose original price is 49,000 but in by-part payment it will cause me 56,000 in 2 years. I want to ask whether it is valid(Halal) or not One of my friend told me that it will valid, if they will taken 56,000 and not above like late-payment charges. And in late-payment charges your purchasing will be in-valid(Haram). And if it is in-valid then why?.
Kindly
help me in this way.
Answer
Muhtaram / Muhtaramah
In the Name of Allāh, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāh wa-barakātuh.
According to Shariah, it is permissible to sell a commodity for more than its market price, if both the parties agree upon it.
Similarly, it is permissible for a seller to determine two different prices, for cash and credit sales, the price for credit sale being higher than the cash price. The only condition is that at the time of actual sale, one of the two options must be determined, leaving no ambiguity in the nature of the transaction. For example, it is allowed for the seller, at the time of bargaining, to say to the purchaser, “If you purchase the commodity on cash payment, the price would be R100, and if you purchase it on credit for six months, the price would be R120. However, the purchaser has to select either of the two options at the time of sale, and the price should be known to both parties. If either of the two options is not determined in specific terms, the sale will not be valid.
Moreover, it is not permissible to impose a condition during the sale that if the purchaser does not pay on time, then a penalty of 10% per annum will be charged.
An Introduction to Islamic Finance Pg:111-118 (Idaratul Ma’arif)
In the light of the above mentioned, it will be permissible for you to buy the motorcycle for R56000, paying off the amount in part payments for 2 years; on condition that this price was agreed upon at the time of sale. This price should not differ in the case of you paying earlier or later than the time stipulated. However, it is against the practice of a true Muslim to delay in the date of payment.
On the other hand, if you bought the motorcycle for R49000, on condition that a penalty or interest of R3500 will be charged per annum, and you paid the amount of 56000 after two years, then the transaction will not be valid.
In the first instance, the extra R7000 paid was in lieu of the commodity, as the price was fixed during the time of sale. Conversely, in the second instance, the extra R7000 was in lieu of the delay, as the price was not fixed during the time of sale.
And Allah knows best
Wassalam
Darul Iftaa, Madrassah In’aamiyyah
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