#787: Ruling on taking Soft Interest-Based Loans instead of Buying on Credit
787 QUESTION
“Asalamu alaikum my beloved brothers and sisters in Islam. Please I need an urgent answer to this question, Allah will increase us in knowledge. We all know that usury (to lend money to someone and demand interest) is un Islamic and also not good for those receiving such money. Now the question is: If you are running a school for instance and you find out that buying food on credit is higher than collecting such money most especially that every organization has cooperative society, and pay back when the money is available. Please which is better, your response with evidence is needed. Thanks.”
“The explanation is, if you are a principal of a Government boarding school where you need to buy food for students and government don’t bring money on time, instead of buying food on credit costly, can one collect loan that the percentage is lower than buying on credit???”
ANSWER:
Wa Alaykum Salām Warahmatullāh Wabarakātuh.
May Allāh illumine your heart and make you of the elect Servants that are manumitted from the Nār this Blessed Month, amīn.
As for your question, it appears like you are about to choose between buying food on credit at an expensive price and taking soft Interest-based loan to buy same.
What is apparent from this scenerio is that you are not under any form of compulsion to transact in interest based loans. Rather you are seeking to choose a less expensive transaction. One very amazing thing here is that you are not responsible for incurring the cost as it is a government school. It therefore seems curious that you are aimed at cutting the cost of the food even though it’s supposed to be a Government expenditure for it’s students.
That said, it is not Permissible for anyone who believes in Allāh and the Last Day to trade or transact in any deal that involves Interest for it is Ribāh and Allāh has warned against it in the Qur’ān
يَا أَيُّهَا الَّذِينَ آَمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنْتُمْ مُؤْمِنِينَ * فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنَ اللَّهِ وَرَسُولِهِ وَإِنْ تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ
“O you who believe! Fear Allāh and beware of what remains of the proceeds of Ribā, if you are truly Believers. If you do not do that then be warned of a War from Allāh and His Messenger. And if you repent (from interest based loans) then you have a right to the Principal (wealth borrowed out). You may not oppress others neither are you to be oppressed.”
In this verse, Allāh commanded the Believers to forgo whatever is supposed to accrue on interest based loans of interest from the transactions they had given out in the Days of Jahiliyyah. They may only take back the Principal loan. The same verse makes Ribāh transactions Harām without exceptions.
And in the Hadīth of ‘Abdullah bn Mas’ūd – radiyallāhu ‘anhu – that was recorded by the Imāms of the Sunan, he said:
“Indeed the Rasūl – salallāhu alayhi wasallam – cursed the one who benefits from Ribā, the one who gives it out, the one who witnesses and the one who records it.”
Imām At-Tirmidhī regarded this as a Sound Hadīth.
Therefore avoid it as a Believer and seek for succour in other than it and Allāh wants the best for you.
Bārakallāhu Fīkum
Jazakumullāhu Khayran.
20th Ramadān, 1440AH.
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