The difference between the cash price and the credit price

Question

Question: Zayd wants to trade in, for example, sewing machines, radios and the like, and in this trade it is customary that a separate price is fixed for cash sale, while for payment in instalments a price higher than the cash price is taken. Is it permissible to trade in this way or not? If it is impermissible, can there be a permissible form — that Zayd divides his shop into two parts, keeping the cash rate in one and the credit rate in the other?

Answer

If, in the very session of the contract (majlis al-‘aqd), the matter is made clear as cash or credit — that the purchase is for cash, or on credit — then trading in this way is valid.

Source: Fatawa Mahmudiyya

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