Pay later but with increased payments
Fatwa No: 85761

Question

I live in the USA. I want to go to a school to get a training to drive big trucks, so I can work as driver. All schools require the full payment for this training at the beginning, but if you can't pay the full price you can pay after you finish training but with a certain interest added to the payment. Is the interest added count as Riba?

Answer

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

 

If the training fees which the school proposes to the public is immediate payment, or delayed payment with added value that does not increase over time, then this is lawful provided the amount due does not increase if the person fails to pay in the fixed time for payment.

Now if the increase in the delayed payment changes with time or if there is a value added for failure to pay on time, then this is forbidden as it includes Riba (interest and/or usury).

Allaah Knows best.

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