Praise be to Allah.
Firstly:
If someone buys an item on a credit, this price becomes a debt that he owes, and it is not permissible to stipulate that he must pay interest or any extra amount in the event of delay beyond the agreed deadline, because that comes under the heading of riba which is haram, regardless of whether the transaction is with another Muslim or with a disbeliever, because of the general meaning of the religious texts which prohibit riba.
This has been explained previously in the answer to question no. 101080 .
The Islamic Fiqh Council belonging to the Organisation of Islamic Cooperation (formerly the Organisation of the Islamic Conference) issued a statement regarding penalties for late payment, during its 14th session held in Doha, in which it says:
… Thirdly: if the one who is buying on credit delays payment of instalments beyond the stipulated deadline, it is not permissible to force him to pay anything in addition to what he owes, whether that is on the basis of a prior stipulation or without any prior stipulation, because that is riba, which is haram. End quote.
The sin of riba is borne by both the one who consumes it or receives it, and the one who pays it, as Muslim (1598) narrated that Jaabir said: The Messenger of Allah (blessings and peace of Allah be upon him) cursed the one who receives riba, the one who pays it, the one who writes it down and the two who witness it, and he said: They are all the same.
Secondly:
If the seller stipulates any penalty in the event of late payment beyond the set deadline, it is not permissible to enter into this contract with him, even if the purchaser is determined to pay on time. That is for two reasons:
1.. Because this is approving of and agreeing with the stipulation of riba, which is haram.
2.. Because he may in fact fall into riba, because he may delay payment for some excuse, such as forgetting, falling sick, travelling and the like.
May Allah help us all to do that which He loves and is pleased with.
And Allah knows best.
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