Essentially a deal may be structured in three ways. 

 

a. Cash Transaction

b. Credit Transaction

c. Credit Transaction paid in instalments

 

All these forms of transactions are independently permissible in Shariah. 

 

a. Cash Transaction

 

A "Seller" puts up a fan for sale for $20 cash. The advert would say something like "Fan For Sale: $30 cash". It is permissible for "Purchaser" to pay the $20 and get the fan. 

 

b. Credit Transaction

 

The "Seller" may also put the same fan for sale for $30 credit to be paid in 30 days. This is also permissible. In this case, after the sale is enacted and the "Purchaser" takes possession of the fan, the owing $30 becomes a loan on the "Purchaser" due over 30 days. 

 

Combining "a" and "b":

 

The "Seller" may structure the deal saying, "Fan For Sale: $20 Cash / or $30 credit over 30 days". Such a structure is also permissible. In such a structure it is vital that that before conclusion of the deal, both transacting parties finalize which mode of payment is being chosen, either "cash" or "credit".

 

c. Credit Transaction paid in instalments

 

The "Seller" may also set up the credit sale on instalments. For example the sale would say "Fan For Sale: $40 credit on instalments of $10 per month for 4 months".This is also permissible. With the completion of the sale "Purchaser" will now own the Fan and will have $40 payable over the next 4 months in $10 instalments. 

 

Combining "a" ,"b" and "c" OR "b" and "c" :

 

However, structuring the deal saying, 

"Fan For Sale: $20 cash. If not paid within 3 days then $30 lump-sum to be paid by 30 days, or $40 to be paid in instalments over 4 months" 

OR "Fan For Sale: "$30 lump-sum to be paid by 30 days. If unable to pay then $40 to be paid in instalments over 4 months". 

Such interconnected transactions are not permissible in Shariah. 

 

Similarly, any credit purchase which has a penalty for late payment (whether a one-time penalty or %age) is strictly riba' and impermissible.  

 

For further reading please see : http://www.qafila.org/bay-muajjal-or-credit-sale-and-instalments/

 

Wallahu a'lam