Purchasing on credit

Purchasing on credit

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.

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).

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.

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 haraam. 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 waajib 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.

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”, this has two aspects to it: (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.

At the time of purchasing an item a person says:
“Give me that item, once I get my money I will pay it to you.”
“When my brother comes, I will pay you.”
“Once the orchard bears its fruit, I will pay you.”
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.