The ruling on selling on Credit with Payments in Installments
Question :
What is the ruling on increasing the amount of cash payment in a sale on credit and by installment payments?
Answer:
Selling for a delayed payment to be paid at a designated time is permissible if the sale contains the considered conditions. Likewise, there is nothing wrong with installment payments on the price of the merchandise, if the payment amounts are known and the times for payment are designated and known. This is due to the Statement of Allâh:
"O you who believe! When you contract a debt for a fixed period, write it down."
And due to the statement of the Prophet:
"Whoever gives an advance on something in trade, then let him do so with a known measurement or a known weight, and for a known period of time."
This is also due to the story of Barirah that is confirmed in the Two Sahihs. For verily, she bought herself (i.e., her freedom) from her masters for 9 Awaaq (weights of silver), to be paid at a rate of 1 Uqiyah (singular of Awaaq) per year. This is the sale of installment payments and the Prophet did not object to it. Rather, he approved of it and he did not prohibit it. There is no difference in this between the price being comparable to what the product is actually being sold for in cash (up front) or if there is an increase on that due to the delayed payment on credit. And Allâh is the Giver of success.
Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 4 Pages 252-253
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