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Adding extra charges to the debt if the debtor fails to pay installments when payable

Q: We have a department for selling cars on installment. Actually, people are not equal regarding paying installments as some of them might become overdue. Please, bear in mind that following up the process of collecting late payments costs us additional charges concerning fees of collectors and supervisors and the like. Is it permissible according to the Shari`ah (Islamic law) to charge defaulters an additional limited percentage in order to cover additional charges (Part No. 11; Page No. 50) and to encourage them to be punctual through being on their guard against incurring additional charges in cases of default?


A: It is impermissible to add extra charges to the debt if the debtor fails to pay installments when payable. Actually, this is the Riba (usury/interest) of Jahiliyyah (pre-Islamic time of ignorance) prohibited by Allah, His Prophet (peace be upon him) and Ijma` (consensus of scholars). Allah (Exalted be He) says: ...but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums). And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if you remit it by way of charity, that is better for you if you did but know. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.


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