Paying a specific percentage of the loan amount by the borrower when he delays repayment
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Fatwa number ( 5832 )
Q: Some companies issue a card for a known loan. One presents it to any bank and receives the amount on it. The bank then recovers the amount from the company that issued the card, and the company pays the bank its due. This loan is deferred for a known period specified on the card. If the holder pays what he owes before the deadline, he owes nothing. If he delays, he is charged a penalty of 1%. Some companies also give some money in exchange for this service, in return for issuing the card. .
A : If the situation is as described, where there is an agreement that the borrower
pays off the loan at the deadline without paying anything extra, but if he delays he pays an additional 1% of the amount, then it is a riba contract. It contains riba al-fadl (usury of excess in a like-for-like exchange), which is that increase, and riba al-nasi'ah (usury of deferment), which is the delay. The same ruling applies if the company gives money and takes an increase over it in exchange for this service. In fact, the second case is more explicit than the first in terms of riba (usury or interest).
Q: Some companies issue a card for a known loan. One presents it to any bank and receives the amount on it. The bank then recovers the amount from the company that issued the card, and the company pays the bank its due. This loan is deferred for a known period specified on the card. If the holder pays what he owes before the deadline, he owes nothing. If he delays, he is charged a penalty of 1%. Some companies also give some money in exchange for this service, in return for issuing the card. .
A : If the situation is as described, where there is an agreement that the borrower
pays off the loan at the deadline without paying anything extra, but if he delays he pays an additional 1% of the amount, then it is a riba contract. It contains riba al-fadl (usury of excess in a like-for-like exchange), which is that increase, and riba al-nasi'ah (usury of deferment), which is the delay. The same ruling applies if the company gives money and takes an increase over it in exchange for this service. In fact, the second case is more explicit than the first in terms of riba (usury or interest).
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.