Is it permissible in installment sales to pay early with a discount?
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The questioner : The second question says: A company works in building apartments, meaning houses, and sells them on installments and for cash. So he asks: If a man buys an apartment from these apartments on installments and pays from the installments, for example, an installment for a period of ten years, and he pays three installments, and he wants to pay the remaining installments in one lump sum, does he have the right to a discount on this portion or not?
The Shaykh : He does not have the right. I mean, if a person buys a commodity on installments for a period of five years, then Allah makes it easy for him and he is able to pay it off within two years, does he have the right to demand a discount from the seller or not? We say he does not have the right. But if the seller agrees and says, "I accept from you early payment with a discount," then the correct view is that there is no harm in it, because this is in the interest of the creditor and the debtor, and it contains no injustice and no riba (usury or interest). Did you understand now? Yes, I did.
The Shaykh : He does not have the right. I mean, if a person buys a commodity on installments for a period of five years, then Allah makes it easy for him and he is able to pay it off within two years, does he have the right to demand a discount from the seller or not? We say he does not have the right. But if the seller agrees and says, "I accept from you early payment with a discount," then the correct view is that there is no harm in it, because this is in the interest of the creditor and the debtor, and it contains no injustice and no riba (usury or interest). Did you understand now? Yes, I did.