Original Question: Many stores allow their customers to purchase through installments which usually carry a higher net price as compared to buying with a lumpsum cash payment. What is the ruling on this?
In the case of purchasing through installments, the execution price must be agreed upon and stated during the sale agreement.
For example, a refrigerator may cost $500 for payment on the spot (now) or $600 for payment through installments.
For this installment agreement to be valid, the contract must only name one price (i.e., $600 of $100 monthly for 6 months).
This is to avoid any ambiguity of the price as stated in a hadith by Tirmidzi, Abu Hurairah r.a. mentioned that the Prophet ï·º prohibits the mentioning of two prices in a sales agreement.
