Is buy now, pay later (Klarna-style instalments) halal?
A pay-later service pays the shop and you repay the service in instalments. If you repay exactly the shop price, it is a loan without increase. If the service adds interest, or adds a fee because you are late, the extra is riba. This differs from a shop selling you an item at a fixed higher price on credit, which is a sale and is allowed.
The guidance
I split a purchase into instalments with a pay-later service. What are the terms?
- Same price as paying now, no interest, and I always pay on timeHalal · A loan · Qur’an 2:279You pay the shop’s price in parts and nothing is added. The pay-later company pays the shop and you repay it the same amount, which is a loan without increase. Pay every instalment on time so no late charge can ever apply.Set up automatic payments, and only use it for what you can afford.Other views: Some Hanafi muftis advise against signing up at all, because the terms include late fees. The OIC Fiqh Academy takes the same line on credit cards.
- The pay-later company charges interest or a rate on what I oweHaram · Riba · Qur’an 2:275Here the company lends you the price and takes back more for the time. That is interest on a loan, even if the rate is small. It differs from a shop selling you the item itself at a fixed higher price, which is allowed (see Buy on credit).
- I miss a payment and the company adds a late feeHaram · Riba · Qur’an 2:275Adding money to a debt because it is paid late is the riba the Qur’an came to end, however small the fee. If you are ever charged one, settle the debt quickly and avoid such plans.
People also ask
Is Klarna halal?
The pay-in-three or pay-in-30-days plans at 0% are a loan without increase if you always pay on time. Their financing plans that charge interest are riba, and any late fee they add is riba. Some Hanafi muftis advise against signing up at all because the terms include late fees.
What if I pay a BNPL instalment late and get a fee?
The fee is an increase on a debt for delay, which is riba, however small. Settle the debt quickly and avoid such plans in future.
Is 0% car or furniture finance from the shop itself halal?
If the shop sells you the item at a fixed price paid in instalments, with nothing added for delay, it is a sale on credit and is allowed. See buying on credit.
Related questions
All questionsThe four schools on riba
This guidance follows the Hanafi school as applied today by Mufti Taqi Usmani and the AAOIFI standards. Notes mark where the Maliki, Shafi’i or Hanbali schools differ. The four schools on riba →