01 / 08 · Law & paper · Default
The clause that decides whether you signed a loan.
A late payment that grows the amount owed as time passes is riba in a uniform. A flat admin fee for a real cost, or a donation to charity the bank cannot keep, is the classical repair.
The Mizan desk · 7 September 2026 · 9 min
Every serious Shariah board has a paragraph on this. You may not charge additional money for delay on a debt. You may recover actual costs. You may require a charitable payment the financier does not pocket, as a deterrent. You may, on default, sell the asset and settle the co-ownership.
What you may not do is write ‘1.5% per month on arrears’ and call it administration. Time-based increment on a sum owed is the definition this entire magazine exists to refuse.
If a missed month increases the debt the way an overdraft does, walk. The rest of the brochure is furniture.
How it is smuggled
As a ‘profit rate step-up’. As a ‘default rent’ that is not rent because you are not using extra space. As a ‘compensation’ calculated like interest. As a cross-default into a tawarruq that synthesises cash so you can be charged on cash.
Open the arrears schedule. If the number grows with days, you are not in a partnership. You are in a loan with a crescent.