What is the ruling on dealing with companies that allow installment payments for purchases at the same price, and impose a late payment penalty on installments that is paid to charitable organizations? Is it permissible to deal with them for one who is confident in their ability to pay on time? What is the ruling on paying an amount to extend the installment period? Is there a sin for one who merely agrees to the contract without paying the late payment penalty?

It is impermissible to stipulate a penalty for late payment of installments for goods sold on credit, because it entails agreeing to a usurious contract. The fact that this penalty is spent on charitable causes does not make it permissible to stipulate it, according to most scholars. Furthermore, for someone unable to pay to offer a sum of money to extend the installment period is usury. Most scholars agree that it is impermissible to enter into a contract that includes a late payment penalty clause, even if the person entering the contract intends to pay on time.