Rules for Purchasing on credit

1. It is permissible to purchase an item on credit. However, it is necessary to specify a period of time, i.e. you will pay the amount after 15 days, after one month or after four months - whatever the case may be. If a person does not specify any period but merely says : "I don't have the money now, I will pay you later", there are two aspects:
   (i) He says : "I will purchase this on condition that I will pay you later." In such a case the transaction will be invalid (faasid).
   (ii) If the person does not include this condition in the actual transaction, but after purchasing it he says : "I will pay you later", this will be permissible.
   If he did not mention anything within the transaction nor anything after the transaction, the sale will be valid and in both these instances he will have to pay cash for the item. If the seller gives on credit on his own accord, it will be permissible. But if he asks for the money immediately, the person will have to give it.

2. At the time of purchasing an item a person says :
   a. "Give me that item, once I get my money I will pay it to you."
   b. "When my brother comes, I will pay you."
   c. "Once the orchard bears its fruit, I will pay you."
   d. Alternatively, the seller says : "Take the item now, and you can pay me whenever you wish."
   In all these cases, the transaction will be invalid. One has to specify a period of time and then purchase the item. If the person purchases the item and then says any of the above, the transaction will be valid and the seller has the right to ask for the money immediately. The exception is that the seller cannot demand for the money before the orchard can bear its fruit.

3. When paying in cash, the price of 200 grams of wheat is R1. But if the person buys on credit, he receives only 150 grams. This transaction is valid on the condition that the buyer is informed of this at that very time.

4. The above rule applies when the seller asked the buyer whether he is going to pay cash or take it on credit. When he replied that he is going to pay cash, the seller gave him 200 grams. And when he said credit, the seller gave him 150 grams. But if the seller says : "If you pay cash, this will be the price, and if you take it on credit, this will be the price", then such a transaction will not be valid (since the buyer has not specified his intention of paying cash of taking on credit).

5. A person purchased an item after promising to pay for it after one month. On the expiry of one month he went to the seller and told him that he must give him a respite for another 15 days, after which he will pay him his money. If the seller agrees, it will be permissible. However, he also has the right to demand the money immediately.

6. Once the person has the money, it is not permissible to delay in paying. He cannot say : "I won't give you today, I'll give it to you tomorrow", "Don't come to collect it now, come at such-and-such time", "I don't have change now, once I get some change I will pay you". All this is harâm. Once the person asks for the money, you should make the change and give him his money immediately. However, if the person purchases something on credit and promises to pay after a certain period of time, then once the time expires, it will be wâjib on him to pay the money. It is not permissible to delay or make the person "run" for his money once the specified time expires. But if the person does not have the money nor was he able to obtain it from someone else, then he has no alternative but to pay it the moment he receives the money. Once he receives the money, he cannot delay in fulfilling his debt.

       Detestation on taking Unnecessary Credit

Hadith One:
Abû Sa‘îd radiyallâhu ‘anhu narrates that he heard Rasûlullâh sallallâhu ‘alayhi wa sallamsaying:
"I seek refuge in Allah from kufr and debts." A person asked: "O Rasulullah! Do you regard kufr and debts to be equal that you are mentioning them together?" He replied: "Yes."

Hadith Two:
‘Abdullah bin ‘Umar radiyallâhu ‘anhu narrates that Rasûlullâh sallallâhu ‘alayhi wa sallam said:
"Debts is the flag of Allah on earth. When He wishes to disgrace anyone, He burdens him with the weight of debts."

Hadith Three:
‘Abdullah bin ‘Umar radiyallâhu ‘anhu narrates that he heard Rasûlullâh sallallâhu ‘alayhi wa sallam advising a person in the following manner:
"Reduce your sins so that your death will be easy. Reduce your debts so that you may live a free person."

Hadith Four:
Abû Hurayrah radiyallâhu ‘anhu narrates that Rasûlullâh sallallâhu ‘alayhi wa sallam said:
"Allah will fulfil the debts of a person who takes on credit with the intention of fulfilling his debt. Allah will destroy the person who takes on credit with the intention of not paying it and cheating people."

Hadith Five:
‘Â’ishah radiyallâhu ‘anhâ narrates that Rasûlullâh sallallâhu ‘alayhi wa sallam said:
"I will help the person who is involved in debts and thereafter makes every effort to fulfil them, but passes away before he can fulfil them."

Hadith Six: Maymûn Kardî radiyallâhu ‘anhu narrates that Rasûlullâh sallallâhu ‘alayhi wa sallam said:
"The person who marries a woman with mahr, whether it be a small amount or a large amount, and has this intention that he will not pay her the mahr and passes away without paying her, then on the day of judgement he will rise as an adulterer in the presence of Allah. And the person who takes a loan with the intention of not paying it back and passes away without fulfilling it, will rise as a thief in the presence of Allah on the day of judgement."

Hadith Seven:
‘Umar bin Shurayd narrates from his father (who is a Sahâbî) that Rasûlullâh sallallâhu ‘alayhi wa sallam said:
"The delaying of a person who is able (to pay his debts) makes his honour and wealth halâl."
In other words, if a person is able to fulfil his debts and yet does not do so, then his creditors can disgrace him, speak ill of him, announce his dishonesty in his transactions, and when possible, they can claim back their rights either openly or in secret.

Hadith Eight:
Abû Dhar radiyallâhu ‘anhu narrates that Rasûlullâh sallallâhu ‘alayh wa sallam said
"Allah abhors three persons:
(a) an old man who is an adulterer,
(b) a poor person who has a lot of pride,
(c) a rich oppressor (who oppresses his creditors by delaying in paying his debts)."