Are pawn shops allowed in Islam?

Are pawn shops allowed in Islam?

There are two situations to consider when it comes to pawn shops in Islam:

1. Selling Your Item with No Strings Attached:
If you sell your item to the pawn shop for a fixed price, and there’s no agreement to buy it back or change your mind later, this is allowed in Islam. It’s just a regular sale.


2. Selling with a Buy-Back Option and Extra Fee:
If you sell the item but also agree to pay extra money later to get it back—like a fee or interest—this is not allowed. That’s considered riba (interest), which is forbidden in Islam.



So, the key difference is whether there’s an added fee or condition to get the item back. If there is, it becomes a form of interest and is not allowed.

It is called in fiqh Al bai’ Al Wafa’ بيع الوفاء.