Early Payment Discount and Interest
Can discounts granted for early payment of a debt be regarded as interest? Could you elaborate on this?

Majority of scholars, compared discounts granted for early payment of the debt to the additions to the debt for late payment, and thus regarded this practice same as interest. On the other hand, such comparison can be made between interest and commercial activities, too. In cases like these, it is imperative to focus on differences, not similarities.

The related part in Abdulaziz Bayindir’s book “Commerce and Interest” is as follows:

“Ibn Qayyim Al-Jawziyya considers such discounts permissible. According to him, “discounts granted for early payment of the debt is direct opposite of interest. Because, interest means increasing the debt for prolonging the time period while this practice is decreasing the debt for shortening the time period. Both parties benefit from this practice.  

The people consider this practice forbidden, compared it to the interest. On the other hand one should clearly see the difference between statements: “either pay on time or increase the debt” and “pay earlier and I will grant you a ring”. No evidence (nas), consensus (ijma) or credible analogy (qiyas) exists that prohibit such practice.

Ibn Qayyim states that, this is Ibn Abbas’ opinion, one of two hadiths reported from Ahmed. B. Hanbal confirms this, which is reported from Ibn Abu Musa and one other person and finally says his teacher Ibn Taymiyya had preferred this opinion.  (Ibn Qayyim Al-Jawziyya, Ilam AlMuwaqqeen, t: 3, p. 371).”

What Ibn Qayyim says is correct. No verse or hadith exists that prohibits discounts. The interest mentioned in verses and hadiths means additions to the debt. Allah commanded the following:

“And whatever you give for interest to increase within the wealth of people will not increase in the sight of Allah.” (Ar-Rum / The Romans 30:39)

“Believers! Beware of Allah and give up what remains of interest, if you are the true believers.” (Al-Baqara / The Cow 2:278)

The messenger of Allah told the following:

“…and don’t increase something of it upon something, and do not sell for ready money something to be given later. (Otherwise you’ll take interest)” (Muslim, The Book of Musaqat, 1584)

In cases like this, the main principle is to focus on not similarities but differences. Men and women are similar in a lot of respects too, but it is the differences between them make us call them men and women. Interest is the addition to the debt while discount decreases from the debt. Since one cannot call a decrease interest, it would be wrong to place discounts into the scope of interest.

For details please refer to Abdulaziz Bayindir, “Commerce and Interest” Suleymaniye Vakfi Yayinlari, Istanbul, 2007

Facebook'ta PaylaşTwitter'da Paylaş
Date: May 27, 2014
Other Fatwas In This Category:
#   Title Date Reads 
1 USURY IN QURAN AND SUNNAH 2010.07.11 5,104
2 Can we give out the interest profit to the poor? 2012.12.17 1,572
3 Bonds 2013.05.31 1,289
5 Borrowing interest-based loans 2012.06.18 842
6 Buying and selling of public property 2013.07.23 1,285
7 PROHIBITION OF USURY 2010.07.11 1,349
8 Can I buy a house by using mortgage from a bank? 2013.04.10 1,368
9 Ruling on Leasing 2014.01.14 1,044
11 Will it be a sin if we give rushwat for taking our own property which is wrongfully seized? 2013.01.27 727
12 Missed Credit Card Payments 2014.01.20 845
14 Is it lawful to buy gold in installments by using credit card? 2012.07.21 2,086
15 Lending and Receiving in Different Currencies 2014.02.12 864
17 Is it lawful to buy and sell gold over internet? 2013.02.11 702
18 Trading unlawful things 2014.03.05 1,164
19 Islamic Economics 2010.07.11 831
20 Is it lawful to buy cash by credit card? 2013.02.11 848
21 Buying Foreign Exchange by Credit Card 2014.03.08 981
22 BEY BI’-L-ISTIĞLÂL 2010.07.13 743
23 What is the difference between renting and interest? 2013.02.26 2,361
24 Death of a creditor 2014.04.25 989
25 Relation Between Alms and Market Economy 2011.04.28 734
26 Is it permitted to rent gold? 2013.02.26 736
27 Early Payment Discount and Interest 2014.05.27 1,335
28 What is the sentence for directing our customers to bank credits(loans)? 2012.01.05 511
29 How to borrow gold from jewelers? 2013.02.28 904
30 Partnership on a fixed profit 2014.11.06 1,281
31 Amount Of Interest 2011.04.14 952
32 What is the ruling on giving a tender to a predetermined company? 2013.03.11 586
33 Paying off debts by loaning 2015.10.22 1,171
34 Is it lawful -halal- to use the bonus points paid by banks? 2017.08.11 2,472
35 Is it permitted to rent our real estate property to banks? 2013.03.31 1,520
36 Using Counterfeit Goods and Pirated Content 2017.04.04 473
37 Is e-commerce legitimate? 2013.01.19 1,130
38 Stock market 2013.04.06 2,144
39 Is getting government scholarship lawful or not? 2017.04.04 492
40 What is the ruling on life insurance? 2011.08.06 1,301
41 Were the older communities ordered to give tax (zakat) like we are? 2013.04.12 575
42 Is Late Fee Considered as Interest? 2017.08.11 397
43 Trade and Usuary 2009.08.25 1,034
44 Is the interest from National Savings Certificates Haraam? 2012.04.24 13,821
45 Can we demand the loss caused by delayed payments from the debtors? 2013.04.27 634
46 Should we collect jizyah from our non-muslim neighbours? 2011.09.16 676
47 Is it permitted to get the 0% interest credits? 2012.06.16 1,016
48 Working in a company that borrows loan on interest 2013.05.19 953