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Subject : An Interest-Bearing Loan is Void
Fatwa Number : 3657
Date : 14-11-2021
Classified : Usury (interest) &Loans
Fatwa Type : Search Fatawaa

Question :

What is the ruling of Sharia on obtaining a loan where the same amount of that loan is repaid, but another party pays the interest?



The Answer :

Praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

Every loan repaid with an interest is usurious, whether the borrower or any other party pays that interest. This is based on the famous legal maxim, which states: “Every Loan That Brings Benefit Is Usury." There is no legal justification permitting a Muslim to sign an interest-bearing loan where another party repays that interest. This is because, from the perspective of Sharia, the usurious loan contract is void. This is attested to in the following verse: " O ye who believe! Fear God, and give up what remains of your demand for usury, if ye are indeed believers. If ye do it not, Take notice of war from God and His Apostle: But if ye turn back, ye shall have your capital sums: Deal not unjustly, and ye shall not be dealt with unjustly." {Al-Baqara, 278; 279}.

In conclusion, it isn`t permissible to take a usurious loan, even if the interest is paid by another party because the loan contract in which interest is conditioned is void from the perspective of Sharia. And Allah the Almighty knows best.

 

 






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