If I purchase an item, on interest-free for three years but have to pay interest after that and know that I can pay it off in less than a year. Is such transaction permissible?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.

This type of transaction is not permissible as it consists of two prohibitions:

Firstly: signing the contract affirming interest and/or usury and that the customer, if he delays in repaying the amount in a limited period of time, will be obliged to pay an extra amount because of the delay. This is affirming to deal with forbidden Ribaa (usury and/or interest).

Secondly: it is probable to fall into Ribaa if the customer delays in repaying the debts at a fixed time.

Allaah knows best.