Is it permissible to purchase an item in installments if the seller charges a service fee that varies based on the amount and duration?

Selling by installment payment at a price higher than the cash price is permissible if three conditions are met:

1. Stating the Total Price: The total price, which includes the increase (interest), must be mentioned without separating it. One should not say "the price is such and such and the installment interest is such and such." Instead, the total price should be stated directly. This is what the Islamic Fiqh Academy has approved. 2. The Contract Being Free of Prohibited Conditions: The contract must not include a penalty clause for delay, or any trick to increase the amount in exchange for delay. It is forbidden for a solvent debtor to procrastinate. Nevertheless, it is not permissible to stipulate compensation in case of delay. However, it is permissible for the seller to stipulate that the installments become due if the debtor delays in paying some of them. 3. The Seller Not Retaining Ownership: The seller is not allowed to retain ownership of the goods after the sale until the installments are paid, as this invalidates the sale. However, it is permissible for him to mortgage the sold item to guarantee his right. In this case, it is forbidden for the buyer to sell the item without the seller's permission.

As for calling the increase "service fees," this is an inaccurate designation. The correct term is that it is an increase in price due to the deferred payment period, as the deferred payment has a share in the price. Jurists have affirmed this, stating that the deferred payment is karşılık of a portion of the price, and that a tangible asset is better than a debt, and that immediate payment has more value than deferred payment. Selling by installment differs from usury in that the increase here is in exchange for a commodity, not for money of the same kind.