The Precepts of Loaning
Giving a loan to a Muslim, especially a Mu’min, is one of the recommended acts. Not only has the Glorious Qur’an enjoined this act, it has in fact deemed the act of giving a loan to a mu‘min as giving a loan to God. It has also promised forgiveness to those who give loans.
The prophetic traditions have also enjoined it, for it has been narrated from the noble prophet (sawas) that whoever grants a loan to his Muslim brother, then reserved for him are good deeds the weight of the mountain of U¦ud, of the mountains of Ra¤w¡ and Sayn¡’. He also added that if the creditor observes leniency in demanding the loan, he will traverse the sir¡§ like a bolt of lightning, without being subject to any accounting or punishment. However, if a Muslim complains of his needs to a person, and the latter fails to grant him a loan, God, the Exalted and Sublime, will make paradise forbidden on him.
It has also been reported from Imam al-¥¡diq (as) that giving a loan is dearer to him than giving the same amount in charity.
2325. It is not necessary to utter a formal expression when giving a loan; rather, if one gives a thing to a person with the intention of giving a loan, and the latter accepts it with same intention, it will be valid.
2326. In the event that a specific period is not stipulated within the loan, whenever the debtor chooses to repay his debt, the creditor must accept it. The same applies if a period is specified, and the debtor chooses to repay the loan after the period has elapsed.
2327. If a specific period is stipulated within the loan agreement, the creditor cannot claim the loan prior to the end of this period. However, if no period is specified, the creditor can claim the loan whenever he wishes to do so.
2328. If the creditor claims—in the event that he has the right to do so—his loan, then should the debtor be able to repay his debt, he must pay it off immediately. If he delays in doing so, he will have sinned.
2329. If the debtor does not own anything besides a house that is befitting of his status, and he resides therein, and some household furniture and other things which are necessities, a creditor cannot claim his loan from him; rather he must wait until the debtor is able to pay the loan.
2330. If a person who is in debt and is unable to pay off his debt, is able to work, and it does not entail any difficulty or hardship for him, it is obligatory for him to work and pay off his loan.
2331. If a person has no way of contacting his creditor, and holds no hopes of being able to do so, he must give the debt to the poor as charity on behalf of the creditor. The obligatory precaution is that he should seek the consent of the hakim al-shar‘i in this case.
In the event that his creditor is not a sayyid, the recommended precaution is that he should not give the debt to a needy sayyid.
2332. If the estate left behind by a deceased does not exceed the cost of his shroud, burial and debts, then his estate should be spent on these items, and his heirs will not inherit anything.
2333. If a person borrows an amount of gold or silver, and its value depreciates, then should he return the same amount, it will suffice. On the other hand, should its value appreciate, he must return the amount that he borrowed. In both cases, there is no harm if the debtor and the creditor are both satisfied with a different amount.
2334. If the borrowed property has not perished, and the owner claims it, the recommended precaution is that the debtor should return the same property to him.
2335. If the creditor stipulates that he should be given an amount that is greater than what he loaned, it will be considered interest and therefore forbidden. An example of this is a case wherein one loans 10kgs of wheat and stipulates that he claim 11kgs of it, or loans 10 eggs with the condition of claiming 11 eggs.
In fact, even if he stipulates that the debtor render a service to him, or return the loan along with an amount of another commodity, it too will be considered interest and therefore forbidden. An example of this is a person who loans $5 and stipulates that it be returned to him along with a lighter.
In fact, if he stipulates that the item being loaned should be returned in a particular manner, such as loaning an amount of raw gold and stipulating that a finished form of it be returned to him, it too will be considered interest and therefore forbidden.
However, if the debtor himself returns the loaned item with an extra amount, without such a thing being stipulated, there is not problem in it. On the contrary, it is recommended.
2336. Giving interest is—like accepting interest—forbidden. The stronger view is that the one who accepts interest becomes the owner of the interest received, although the more precautious stance is that he should avoid disposing it.
2337. If a person acquires wheat or anything similar through an interest based loan, and cultivates it, the stronger view is that he becomes the owner of the produce that is acquired from it. The more precautious measure however is that one should avoid disposing it.
2338. If a person buys a piece of clothing and pays for it using property that was acquired through an interest based loan, or pays for it using legal property that is mixed with such property, there is no problem in wearing it and offering prayers in it. The same will apply if he states to the seller, “I am buying this piece of clothing with this property,” although the more precautious measure is that he avoid using it.
2339. If a person loans an amount of money to someone, so that someone on his behalf may retrieve a lesser amount from the latter in another city, it will not be problematic. This is called ¥arf al-bar¡‘ah.
2340. If a person loans an amount of money to someone, with the arrangement that he be repaid a greater amount a few days later in another city, it will be considered interest and therefore forbidden. An example of this is a person who loans $990 to someone, with the arrangement that he be repaid $1000 ten days later in another city. However, if the party that is taking the extra amount, gives something in return or renders a service in return, there is no problem in doing so.
2341. If someone is owed a commodity other than gold or silver, and a commodity that is not transacted by weight or volume, he may sell it to the debtor or to another individual for less than its value, and take its payment immediately. However, if the loan is of currency bills, then selling it for an amount that is less than its value, given that the payment is of the same kind as the bill, is problematic. However if it is not of the same kind, such as selling Euros for dollars, it is not problematic.
Similarly, a person may deduct an amount from the debt that he is owed by a debtor, and take the remaining amount immediately.