Introduction

Modern life often necessitates making significant purchases like smartphones, home appliances, and even vehicles. To make these acquisitions more accessible, many turn to installment plans. However, a recurring question arises among those seeking to follow Islamic principles: "Are installments Haram in Islam?" This article delves into this topic, exploring the Islamic perspective on buying on installments and its compatibility with Sharia law.

Islamic Perspective

The Islamic viewpoint on buying on installments is rooted in the principles of Sharia law. According to a fatwa (Islamic legal ruling) from IslamWeb, it is permissible for individuals to engage in transactions that involve deferred payments or installment plans. This is contingent on adhering to the guidelines set by Sharia.

Sharia recognizes that prices can fluctuate over time due to various factors, including market dynamics. Therefore, it permits transactions in which the price of an item increases over a known period, as long as the transaction itself is in line with Sharia principles.

Types of Installments

When considering the permissibility of installments in Islam, it is essential to distinguish between various types of installment plans:

1. Installments through a seller: In this scenario, you purchase an item from a seller at a fixed price, which can be paid in installments. Even if the total amount exceeds the current market price of the item, it is considered permissible as long as both parties agree to the terms upfront.
2. Installments through a mediator: Another approach involves a mediator who first acquires the item through a lawful transaction and then sells it to you in installments at a higher price. This arrangement is also considered permissible as long as it adheres to Sharia guidelines.
3. Installments through usury-taking institutions: Transactions with banks or similar institutions that charge interest on the amount are not considered permissible in Islam. These institutions essentially provide a loan with interest, which is prohibited in Islamic finance.

Usury and Interest

The critical distinction in Islamic finance lies in whether a transaction involves genuine buying and selling or if it resembles usury or interest. In transactions with usury-taking institutions, the lender essentially loans you the money and expects repayment with additional interest, making it Haram according to Islamic principles.

Conclusion

In conclusion, the permissibility of buying on installments in Islam hinges on adhering to Sharia principles. Transactions involving deferred payments are allowed, provided they are structured in accordance with Islamic guidelines. However, one should exercise caution when dealing with financial institutions that charge interest, as these transactions are considered Haram in Islam due to their association with usury.

For those seeking to make purchases through installments while adhering to Islamic principles, it is advisable to consult with knowledgeable scholars who can provide guidance on the specific terms and conditions of installment plans.