Charging an extra fee for late payment
Q: I go to university and the university have said that the fees for the second semester will be 4000 euros, and they announced a deadline by which the money had to be paid by, and they said that anyone wishing to pay the money after this period of time would have to pay 4000 euros and a small percentage of the original fee on top, and the extra fee that will be paid will increase every day after the deadline day. So for example, if I paid three days over the deadline the university would charge me 4003 euros and if I paid 7 days I would be charged 4007 euros and 8 days would be 4008 euros etc. If i was to pay after their deadline, would this considered to be riba, despite the fact that I am not borrowing money from a bank to pay the fee?
A: Charging an extra fee for late payment is not permissible. The extra amount charged is riba (interest).
And Allah Ta’ala (الله تعالى) knows best.
وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا (البقرة 275)
الربا هو الفضل المستحق لأحد المتعاقدين في المعاوضة الخالي عن عوض شرط فيه (هدايه 3/78)
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