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 
2 Is it lawful to buy gold in installments by using credit card? 2012.07.21 2,188
3 Lending and Receiving in Different Currencies 2014.02.12 894
5 Is it lawful to buy and sell gold over internet? 2013.02.11 741
6 Trading unlawful things 2014.03.05 1,219
7 Islamic Economics 2010.07.11 889
8 Is it lawful to buy cash by credit card? 2013.02.11 893
9 Buying Foreign Exchange by Credit Card 2014.03.08 1,036
10 BEY BI’-L-ISTIĞLÂL 2010.07.13 773
11 What is the difference between renting and interest? 2013.02.26 2,574
12 Death of a creditor 2014.04.25 1,055
13 Relation Between Alms and Market Economy 2011.04.28 760
14 Is it permitted to rent gold? 2013.02.26 760
15 Early Payment Discount and Interest 2014.05.27 1,421
16 What is the sentence for directing our customers to bank credits(loans)? 2012.01.05 534
17 How to borrow gold from jewelers? 2013.02.28 955
18 Partnership on a fixed profit 2014.11.06 1,390
19 Amount Of Interest 2011.04.14 996
20 What is the ruling on giving a tender to a predetermined company? 2013.03.11 612
21 Paying off debts by loaning 2015.10.22 1,273
22 Is it lawful -halal- to use the bonus points paid by banks? 2017.08.11 2,661
23 Is it permitted to rent our real estate property to banks? 2013.03.31 1,616
24 Using Counterfeit Goods and Pirated Content 2017.04.04 547
25 Is e-commerce legitimate? 2013.01.19 1,184
26 Stock market 2013.04.06 2,282
27 Is getting government scholarship lawful or not? 2017.04.04 586
28 What is the ruling on life insurance? 2011.08.06 1,336
29 Were the older communities ordered to give tax (zakat) like we are? 2013.04.12 599
30 Is Late Fee Considered as Interest? 2017.08.11 488
31 Trade and Usuary 2009.08.25 1,105
32 Is the interest from National Savings Certificates Haraam? 2012.04.24 14,313
33 Can we demand the loss caused by delayed payments from the debtors? 2013.04.27 666
34 Interest in My Health Savings Account 2017.11.22 167
35 Should we collect jizyah from our non-muslim neighbours? 2011.09.16 707
36 Is it permitted to get the 0% interest credits? 2012.06.16 1,068
37 Working in a company that borrows loan on interest 2013.05.19 998
38 USURY IN QURAN AND SUNNAH 2010.07.11 5,503
39 Can we give out the interest profit to the poor? 2012.12.17 1,680
40 Bonds 2013.05.31 1,361
42 Borrowing interest-based loans 2012.06.18 886
43 Buying and selling of public property 2013.07.23 1,324
44 PROHIBITION OF USURY 2010.07.11 1,419
45 Can I buy a house by using mortgage from a bank? 2013.04.10 1,458
46 Ruling on Leasing 2014.01.14 1,087
48 Will it be a sin if we give rushwat for taking our own property which is wrongfully seized? 2013.01.27 754
49 Missed Credit Card Payments 2014.01.20 882