Short answer
Interest-free instalment plans are generally permitted in the Hanafi view, since paying a fixed price in parts is a normal deferred sale or an interest-free loan. Plans that charge interest (an APR) are haram. Many muftis advise avoiding plans with late fees unless you are sure to pay every instalment on time.
Buying on deferred instalments is permitted, even at a price above the cash price, as long as the price is fixed at the start and never grows with time. A plan that adds interest is riba. Agreeing to a late fee clause is disliked, so use such a plan only with automatic payments you can meet.
The four schools agree on this.
Explanation
Paying later is not a problem in itself. The Prophet ﷺ bought food from a Jewish trader on deferred payment and left his armour as security. Hanafi jurists allow a seller to charge more for an instalment sale than for cash, because the extra is part of an agreed price, not a charge for a loan. The price must be settled when you buy and must not rise if you pay late.
Most buy now pay later apps work differently: the provider pays the shop in full, and you repay the provider. That is a loan. If you repay exactly what was paid, with no interest and no fees for time, it is an interest-free loan and permitted.
- Pay in 3 or 4, no interest: permitted, if you will pay on time.
- Monthly financing with an APR: haram, since it is a loan with interest.
- Plans with late fees: a fee that grows with delay or goes to the lender as profit is riba. See Are late fees haram? Some muftis allow these plans for people who are sure to pay on time; others advise avoiding them.
Ask yourself whether you need the item at all. Easy credit pushes people into debt for wants, and the Quran forbids spending wastefully (17:26). Delaying a payment you can afford is itself a wrong. These apps change their terms often, so check the current agreement, and ask a mufti about a specific plan.
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ ﴿٢٧٥﴾
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
A deferred sale at an agreed price is trade, while a charge for a loan is interest.
Quran, Surah Al-Israa 17:26
وَءَاتِ ذَا ٱلْقُرْبَىٰ حَقَّهُۥ وَٱلْمِسْكِينَ وَٱبْنَ ٱلسَّبِيلِ وَلَا تُبَذِّرْ تَبْذِيرًا ﴿٢٦﴾
And give the relative his right, and [also] the poor and the traveler, and do not spend wastefully.
Credit should not be used to spend beyond need.
Sahih al-Bukhari 2096
Sahih... اشترى رسول الله صلى الله عليه وسلم من يهودي طعاما بنسيئة ورهنه درعه ...
"The Messenger of Allah bought food from a Jewish man on deferred payment and gave him his armour as security."
Buying on credit is permitted.
Sahih al-Bukhari 2287
Sahih... مطل الغني ظلم ...
"Delay in paying by someone who is able to pay is injustice."
Paying instalments on time is a duty.
Where the ruling is recorded
- al-Hidaya, Kitab al-Buyu', on a price deferred to a known term. A sale with a deferred price is valid when the term and price are known.
- Mufti Taqi Usmani, An Introduction to Islamic Finance, Chapter on instalment sales. A higher price for credit is permitted when fixed at the time of sale.
This answer is pending review by the scholars on our team. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.