Shariah rulings about loans

Islam has created the way of giving loans to the needy people and has given glad tidings on doing so.  When taking a loan, an intention of returning it must be made, as this leads to the benevolence of Allah Ta'ala in this world and the next.  It is mentioned in the Hadith:

 

Allah (Subhanahu Wa Ta'ala) helps the person who takes a loan and has the intention of returning it.  One receives reward even on the intention of repaying the loan.

 

The ruling about this is that the money regardless of whether it remains with the borrower or the lender, it is the property of the lender.  It is the responsibility of the borrower to repay the loan within the stipulated period.  If the lender dies, then giving away the money in charity is not correct, as then the amount becomes the inheritance of the heirs and inheritance cannot be given to others.

 

Taking a loan from the bank

 

For a very dire need, there is a possibility of taking a bank loan, but it is necessary to confirm that the need is indeed a dire one.   For e.g., taking a loan for construction of house does not seem to be a dire need and as such taking a loan for this would not be permissible.

 

Giving gold on loan

 

In the Shariah, giving gold as loan is permissible.  If gold is taken as a loan, then as per the Shariah, the same quantity (weight) of gold has to be returned.  Here the fluctuations in the price of the gold are not considered, only the weight of the gold will be considered.  Thus, if `80000 worth of gold is taken, then the same weight of the gold should be returned at the time of repayment.  As given in Durre

Mukhtaar, Vol.  4, Kitab Ul Buyu’

 

Buying vehicles on finance

 

On taking an vehicle on finance, the amount is returned in installments.

 

Buying or selling, whether it is with paying money on the spot or on loan, whether the payment is made all at once or in installments, is valid and permissible with a few conditions.

 

As Allah Ta'ala says in Surah Baqarah-275

 

Allah has declared trading (buying and selling) lawful and usury unlawful.

 

This verse mentions that buying and selling is Halal (permissible).  In this permission, buying with spot payment and on loan, both are included regardless of whether the payment is made lump sum or in installments.

 

The difference between the price on spot payment and installments, the time period of installments and the difference in price based on the number of goods, etc.  is all left to the discretion of the buyer and the seller.  However, it is better to decide everything clearly beforehand.  It is also necessary to decide the number of installments and their time period well in advance.  Increasing the amount due to nonpayment after deciding all these details comes under usury (Sud), which is prohibited in Islam.  Thus,

the amount decided at the time of the deal, whether it is less or more, only that amount is to be paid.

 

As given in "Minhatul Khaliq 'Alal Bahr Ur Raiq, Vol.  5, Pg.  No: 280 and "Badai Us Sanai", Vol.  4, Pg.  No: 407.

 

Buying a vehicle on installments with the above conditions is permissible in the light of the Shariah.

 

Dua for debt clearance

 

After the Salaat (Namaz), you recite Durud and recite this Dua.  Allah Ta'ala willing, difficulties relating to debt will be solved:

 

Transliteration: Allahumma Innee A'aoodhubika Minal Hammi Wal Huzni Wal 'Ajzi Wal Kasli Wal Bukhli Wal Jubni Wa Zal 'Id Daini wa Ghalabatir Rijali.

 

You keep reciting this Dua with Durud after every Salaat.  Allah Ta'ala willing, your difficulties will be dispelled.

 

Translation: O Allah (Subhanahu Wa Ta'ala)! I seek your protection from sorrow, from helplessness, from laziness, from miserliness, from cowardice, from debt and from being dominated by people.