Question

There’s a shop with multiple products. The minimum product there is of $100. Also on every product there is a 1% extra service charge. I only have $50 right now. The shop owner gives me a loan on the condition that I can spend it only in his shop.

Can I take this loan? I only have to return the exact loan amount he gives me. Also the 1% service charge will be there wether I pay with my own money or borrow from him.

There are shop owners who do monthly subscriptions like these, where you can buy whatever you want and will be charged monthly. How is this different from what I described above?

Answer

This type of loan is permissible since you will only return the loaned amount without any additional interest. The condition that restricts the borrower to spend the loan only at the lender’s shop will be void and not binding according to the Shariʿah. However, the loan may still be spent there due to practical and legal considerations.

The service charge applied to every product is independent of the loan, and would be considered part of the overall cost of the product, which means it is not interest nor does it affect the loan.

Regarding monthly subscriptions, if by this you are referring to purchasing products on credit with the total amount being paid on a monthly basis, this is permissible as it is a defered payment and not a loan. Loans may involve interest, which is the key difference between the two types of sales you mentioned.

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel