How big should the down payment be on a qist plan?

The first payment should at least cover what the item cost you, plus the two payments you would let slide before you said anything. On most goods that lands between a quarter and a third. Below that you are lending your own capital, not selling on qist, and the months ahead will show it.

What the down payment is really for

Most shopkeepers treat the first payment as a deposit, a sign of good faith. It is far more than that, and thinking of it correctly changes every plan you write afterwards.

It is the part of your money that comes home immediately. Everything else in the plan is a promise about months that have not happened yet, and promises depend on his health, his employer, his own customers and a dozen things neither of you controls.

It is also the only moment when he is definitely willing and definitely able. On the day a man takes a fridge home, he is at his most motivated. Every month after that, the excitement fades and the payment competes with the school fee, so whatever you did not collect at the start becomes progressively harder to collect.

And it is the honest test of whether he can carry the plan at all. A person who cannot put together the first amount for something he badly wants is telling you, without meaning to, how the fourth payment is going to go.

The number, on a real item

Put an ordinary sale on paper and the ranges stop being abstract.

Say a Rs 30,000 item, six months, three different first payments

Cash price of the itemRs 30,000

First payment at one tenthRs 3,000 · 27,000 out

First payment at one quarterRs 7,500 · 22,500 out

First payment at one thirdRs 10,000 · 20,000 out

What you can buy back with the first paymentRoughly its own size

Money of yours living in his houseRs 20,000 to Rs 27,000

The last row is the one that matters most to a small shop. The first payment is not just security; it is stock. Rs 10,000 collected at the counter goes straight back into goods that turn over four times before his plan finishes, while Rs 3,000 leaves you funding his purchase out of your own shelf.

That is why the tenth-part plan is dangerous even when the customer is perfectly honest. You have not lost anything yet, but you have moved a large piece of your working money into somebody else's house for half a year, and a shop with thin stock earns less every single day it stays thin.

Look at the middle option and be realistic about your own street. A quarter is the figure most small shops can actually get agreement on, and it is usually enough, provided the rest of the plan is short. The longer the plan runs, the more the first payment has to do.

What the size of his offer tells you

The negotiation over this number is the most useful conversation in the whole sale, and most shopkeepers rush through it to get to the sale.

What the size of his offer quietly tells you

He offers a big first paymentHe pushes it as low as possible

About his cash todayHe offers a big first paymentHe has some saved and can part with itHe pushes it as low as possibleNothing spare, or it is already promised

About the months aheadHe offers a big first paymentHe expects the small payments to be easyHe pushes it as low as possibleHe is counting on income he does not have yet

About how badly he wants itHe offers a big first paymentConsidered, and probably neededHe pushes it as low as possibleSometimes a want he cannot yet afford

What you should doHe offers a big first paymentShorten the plan and keep it simpleHe pushes it as low as possibleAsk for a guarantor or a smaller item

Ask the question plainly: "How much can you give today?" Then be quiet and let him answer. The figure he names first, before any pushing from you, is the single best piece of information you will get about his real position.

If it comes in well under your floor, that is not automatically a no. It is a signal to change the shape of the deal rather than the person: a shorter plan, a smaller item, a guarantor, or a later start date after he has had time to gather the amount. Whether a guarantor is the right answer here is worth thinking through separately, and when to ask for one and when not to covers it properly.

What you should not do is quietly drop your floor because you want the sale. The plans that fail are almost never the ones refused at the counter; they are the ones agreed at the counter against a rule the shopkeeper had already set for himself.

Setting your own floor

Your floor is a number you work out once, in a quiet hour, and then apply the same way to everybody.

Four steps to set your own floor

1. 1Start from your cost, not from the selling priceThe first payment should at least cover what you paid the supplier for the item, so that a plan going wrong costs you your profit and not your capital.
2. 2Add the months you would wait before actingNobody chases a missed payment on the first day. If in practice you allow two months of silence before a serious conversation, two payments belong in the first amount.
3. 3Adjust for what the item is worth usedSomething that holds its value can carry a smaller first payment. Something that is worth half the day it leaves your shop needs a bigger one, because taking it back solves nothing.
4. 4Write the floor down and keep it for everybodyA rule you can say out loud protects you from the customer who bargains hardest, who is very often the one you should have taken the most from.

Step two is the one nobody does, and it is the difference between a floor that holds and one that does not. Be honest about how you actually behave: if a payment is missed and you say nothing for eight weeks, then eight weeks of payments have to already be in your hand on day one, because that is your real exposure and not the theoretical one.

Step three matters more on some goods than others. A mobile phone loses value the moment it leaves the shop, so taking it back after two payments recovers very little; a sewing machine or a set of tools holds far more. Where a used item is worth almost nothing, the first payment has to carry the whole risk on its own.

Once you have the number, put it in the plan the same day you agree it. A qist plan that is written down completely, with the first amount, the schedule and any one-time markup you added at the start, is the plan nobody argues about later. That is exactly what building a qist plan that stays fair is about, and Wasoolo will hold the whole schedule and show you what is left after every payment.

The down payment is not the markup

These two get confused constantly, and confusing them is how a good shopkeeper ends up accused of something he did not do.

The markup is the one-time profit you add when the plan is created, because selling over months ties up your money and carries risk. You set it, you say it out loud at the start, and it becomes part of the total the customer agrees to. It never grows afterwards, and it has nothing to do with whether a payment arrives on time.

The down payment is simply how much of that agreed total is paid on the first day. It changes your exposure, not the price.

Keep them separate when you explain the deal: "Cash price is thirty thousand. On six months it is thirty-three thousand. Ten thousand today, and then four thousand a month." Any customer can follow that, and nobody ever comes back saying he was charged something he was not told about. And nothing extra is ever added for lateness, which is not a charge you should be operating at all.

Where plans actually go wrong

Two shops can take the same first payment and get very different results, so it is worth knowing which of the remaining details do the work.

The plan length is the biggest one. A large first payment stretched over eighteen months is worse than a smaller one over four, because time is what breaks plans. People's circumstances change, they move, they lose work, and every extra month is another chance for that to happen.

The second is a payment date that does not match his income. If he is paid on the first, a schedule due on the twenty-fifth is fighting his month rather than working with it, and the reasons a payment slips are covered in what to do when a qist is missed.

The third is not writing the plan down in front of him. A schedule agreed verbally will be remembered generously by both sides. Read it back once, hand him a copy, and the whole thing becomes a shared record rather than two memories.

Finally, be clear with yourself about whether this sale should be a qist plan at all. For some items and some customers, a plain balance on the khata is simpler and safer for both sides, and choosing between udhaar and qist on a big item is a decision worth making before you talk about first payments.

Common questions

Is there one right percentage for a down payment?

There is no single figure, because it depends on your cost, the length of the plan and what the item is worth once used. What is consistent is the method: cover your own buying cost, add the payments you would let slide before acting, and check the result against how much the item would fetch second hand. On ordinary goods over four to six months that usually produces something between a quarter and a third, but arrive at it by working, not by copying.

A regular customer of ten years wants to pay nothing up front. Should I agree?

You can, and sometimes it is the right business decision, but do it with open eyes rather than out of embarrassment. Shorten the plan sharply so your money is out for weeks rather than half a year, and keep the total small enough that losing it would not change how your shop runs. What ruins these arrangements is not the trust, it is the size, so treat a long relationship as a reason to be flexible on structure and never as a reason to be careless about the amount.

He wants to pay the first amount in two parts before taking the item. Is that safe?

It is one of the safest arrangements available to you, and shopkeepers turn it down far too readily. Nothing leaves your shop until the whole first amount is with you, so your exposure is zero during the collecting, and a man who saves toward it over a few weeks has proved he can produce money on a schedule. Hold the item for him, write down what has been paid so far, and hand it over when the amount is complete.

Should I take a bigger first payment from a new customer than a regular one?

Yes, and it is normal practice everywhere. You have no history with a new name, so the first payment is doing the job that experience does for a regular. Say it as a policy rather than a judgement, something like a first plan always starting at a third, and mention that later plans can be easier once you have dealt with each other. Most people accept that immediately because it is obviously reasonable.

What if he offers a large first payment but wants a very long plan?

Take the large amount and still shorten the plan, because the two are not substitutes for each other. A big first payment protects you against loss; a short plan protects you against time, and it is time that produces most failures. If he genuinely needs small monthly amounts, look at whether a cheaper version of the item fits his money better, which is a more honest answer than a plan neither of you can really see the end of.

Can I reduce the item's price if he pays a bigger amount up front?

You can, and it is a clean way to reward cash. Just make sure the reduction is announced as a smaller markup on that plan and not as something taken off later, so the total he agrees to is the total from the first minute. Discounts introduced afterwards are where plans get muddled, because the customer remembers the concession and you remember the original figure, and neither of you is lying.