Tuesday, 22 November 2011

Loan... Cases and Ruling

All praise to Allah lord of the realms, and his blessing and peace be upon His prophet Mohamed and all his family and companions:

This my fellow Muslim is a message dedicated to demonstrate the rules of Loan, collected from books of different scholars may Allah have mercy on them, for the sake of Allah and the reward of hereafter. May Allah grant us success, on Him we rely and to Him we return.

Definition of a Loan

Linguistic meaning: It is a Deduction (Kate’), as the lender deducts from his capital to give it to the borrower.

Religious legislative meaning: Giving a sum of Money to whomever benefits from it, then return its equivalent.

The Permissible Form of Loan

Loan is permissible according to Sunnah and Consensus of Muslim legal scholars:

Prophet Mohamed Peace and blessing of Allah be upon him borrowed a virgin She-camel and returned full grown male camel. He said: the best amongst people whom returns a loan in the best form. [Reported by Al-Bukhari]
«أن رجلا أتى النبي صلى الله عليه وسلم يتقاضاه بعيرا ، فقال رسول الله صلى الله عليه وسلم: (أعطوه). فقالوا : ما نجد إلا سنا أفضل من سنه ، فقال الرجل : أوفيتني أوفاك الله ، فقال رسول الله صلى الله عليه وسلم : ( أعطوه ،فإن من خيارالناس أحسنهم قضاء)» رواه البخارى

The Virtues of lending:

Lending people is a pious act the servant does to please Allah exalted be his ranks, as it shows kindness and mercy to people, thus facilitating their matters and move the burdens off their chest. Prophet Mohamed peace said:- “He who alleviates the suffering of a brother out of the sufferings of the world, Allah would alleviate his suffering from the sufferings of the Day of Resurrection, and he who finds relief for one who is hard pressed, Allah would make things easy for him in the Hereafter, and he who conceals (the faults) of a Muslim, Allah would conceal his faults in the world and in the Hereafter. Allah is at the back of a servant so long as the servant is at the back of his brother.” [Reported by Muslim]
«من نفس عن مؤمن كربة من كرب الدنيا، نفس الله عنه كربة من كرب يوم القيامة. ومن يسر على معسر ، يسر الله عليه في الدنيا والآخرة . ومن ستر مسلما ، ستره الله في الدنيا والآخرة . والله في عون العبد ما كان العبد في عون أخيه...» رواه مسلم

He also said: “Whenever a Muslim lends another Muslim a loan twice, it is considered as a single alms (charity)” [Reported by Ibn Majjah and classified as Hasan (Good) By Al-Albani]
« ما من مسلم يقرض مسلما قرضا مرتين إلا كان كصدقتها مرة» رواه ابن ماجه وحسنه الألبانى

He also said: “Whoever endows a small amount of milk or silver, or even leads through an Alley (side road) his reward equals the reward of freeing a slave.” [Reported and declared Hasan (good) by Al-Tirmizi]
« من منح منيحة لبن أو ورق أو هدى زقاقا كان له مثل رقبة» رواه وحسنه الترمذى

He also said: “Every loan is an Alms(Sadaqa).” [Classed as Hasan (Good) by Al-Albani]
« كل قرض صدقة» حسنه الألبانى

Stipulating a due date
Majority of scholars held the opinion of impermissibility of stipulating a due date to pay a debt, because it is a pure act of donation, whereas the debtor is allowed to acquire the loan at the moment of request. Imam Malik Said,” That it is permissible to stipulate a due date and this condition is obligatory, thus if there is a conditional due date to pay the dept, then it’s deemed to be due at this date. Before this due date, the creditor has no right to redeem the loan. For Allah Almighty said: “O you who have believed, when you contract a debt for a specified term, write it down” [Al-Baqarah 2:282]
{إِذَا تَدَايَنتُم بِدَيْنٍ إِلَى أَجَلٍ مُّسَمًّى فَاكْتُبُوهُ}[البقرة:282]
Transliteration: Yā 'Ayyuhā Al-Ladhīna 'Āmanū 'Idhā Tadāyantum Bidaynin 'Ilá 'Ajalin Musammáan Fāktubūhu

Prophet Mohamed said: “Muslims are liable to their stipulations.” [Reported by Al-Tirmizi and Authenticated By Al-Albani]
« المسلمون عند شروطهم» رواه الترمذى وصححه الألبانى

Conditions of a Permissible Loan:

1-The creditor deemed of eligible to grant a loan. i.e. An orphan Guardian is not Allowed to grant loans from the orphans capital.
2-The amount of loan granted must be fixed before granting it, i.e. amount of money.
3-Awareness of the characteristics of the borrowed property e.g. age of the animal at the time of borrowing, to return it in the same state he borrowed.

What is accepted as a Loan?

It’s accepted if it’s the following:

1-Gold, Silver, and paper currency.

2-Any property subject to selling like clothes and animals. Measured, weighed, and counted items. Things that is not variable in size like eggs. Paper the same size and measured fabrics. Bread in mass and number for the peoples need.

Every Loan leads to benefit is Usury

The notion behind giving a loan is kindness to people to support them in their living thus making their lives easier, not used as an exploitation tool. That is why a debtor must return to the creditor the thing he borrowed or something like it, thus acting accordingly with the Fiqhi Rule stating that “Every loan leads to a benefit is Usury”. Impermissibility is restricted with the benefit stipulated or agreed on. Thus, if the increase not stipulated or agreed on, the increase is permissible. Supported by a Hadith narrated by Aby Rafe’ saying: “The prophet borrowed a virgin she-camel and when the charity camels arrived he asked me to return to the lender a virgin She-camel I said “ I didn’t find any except a full grown male camel( completed six years and in his seventh)”. The Prophet said “Give it to him, the most favored of people whom returns a loan in the best form”. [Reported by Al-Tirmizi and Ibn Majjah, Authenticated By Al-Albani]
«استسلف رسول الله صلى الله عليه و سلم بكرا فجاءته إبل من الصدقة قال أبو رافع فأمرني رسول الله صلى الله عليه و سلم أن أقضي الرجل بكره فقلت لا أجد في الإبل إلا جملا خيارا رباعيا فقال رسول الله صلى الله عليه و سلم أعطه إياه. فإن خيار الناس أحسنهم قضاء» رواه الترمذى وابن ماجه وصححه الألبانى

Narrated by Jabir Ibn Abdullah May Allah be pleased with him: That prophet Mohamed once was debited to me, so he returned the loan and gave an increment. [Reported by Muslim]

«كان لي على النبي صلى الله عليه وسلم دين. فقضاني وزادنى...» رواه مسلم

Kinds of an Impermissible Loan that leads to a benefit

1- Lending two thousand or three thousand in order the debtor help him sell his house, returns one more valuable or higher in price.
2- Giving loan stipulating that the debtor finds him a job, his father, or anyone of his relatives.
3- Giving a loan in return of a favor. e.g. Real Estate rental and its kind.

With other similar cases in the practice of people, Prophet Mohamed –peace and blessing be upon him-: Prohibited to give a loan for a sale. [Reported by Al-Nasa’i and Al-Albani comment it’s Good and Authentic]
«أن رسول الله صلى الله عليه وسلم نهى عن سلف وبيع» رواه النسائى صححه الألبانى

It is Narrated that Ibn Ka’b, Ibn Mas’ud and Ibn Abbas May Allah be pleased with them all, Prohibited any Loan that leads to benefit, because it’s a contract of mercy and pious leading the loan to be deviated from its main context. It is a duty upon every Muslim to acknowledge and beware of this point, purifying his intention in the issue of loan and other pious acts. The nourishment sought from Loan giving isn’t materialistic rather it’s the moral benefit that is sought, pleasing Allah Almighty through lifting the burden of the needy and redeeming the same capital lent. If this is the intention, then Allah will nourish his money with blessings.

Striving to return or pay the Debt before death

Some people take Public rights lightly, especially when it comes to religious duties, which is bad trait leading people to refrain from giving loans and making people’s lives easier. Therefore, it is a duty upon the debtor to return the debt without stalling or any delay whenever he is financially capable. Allah almighty said: “Is the reward for good [anything] but good?” [Al-Rahman 55:60]
{هَلْ جَزَاء الْإِحْسَانِ إِلَّا الْإِحْسَانُ}[الرحمن:60]
Transliteration: Hal Jazā'u Al-'Iĥsāni 'Illā Al-'Iĥsānu

He also said: “Indeed, Allah commands you to render trusts to whom they are due” [Al-Nisa’ 4:58]
{إِنَّ اللّهَ يَأْمُرُكُمْ أَن تُؤدُّواْ الأَمَانَاتِ إِلَى أَهْلِهَا}[النساء:58]
Transliteration: 'Inna Allāha Ya'murukum 'An Tu'uaddū Al-'Amānāti 'Ilá 'Ahlihā

Prophet Mohamed -peace and blessings be upon him- said: “Delaying of the rich is ingratitude…” [Reported by Al-Bukhari and Muslim]
«مطل الغني ظلم» رواه البخارى ومسلم

Other evidence of the aforementioned:

Prophet Mohamed -peace and blessings be upon him- saying: “Whoever takes the money of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to damage it, then Allah will waste him." [Reported by Al-Bukhari]
«من أخذ أموال الناس يريد أداءها أدى الله عنه ، ومن أخذ يريد إتلافها أتلفه الله» رواه البخارى

He also said: “Whoever dies innocent of three matters; arrogance, plunder and debt enter paradise.” [Reported by Ibn Majjah and Authenticated by Al-Albani]
«من فارق الروح الجسد وهو بريء من ثلاث دخل الجنة من الكبر والغلول والدين» رواه ابن ماجه وصححه الألبانى

He also said: “The soul of a believer is bound to his debt until he returns it.” [Reported by Al-Tirmizi and Authenticated by Al-Albani]
«نفس المؤمن معلقة بدينه حتى يقضى عنه»

The obligation of respite towards whose experiencing hardship in debt

Allah almighty said: “And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [from your right as] charity, then it is better for you, if you only knew” [Al-Baqara 2:280]
{وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ وَأَن تَصَدَّقُواْ خَيْرٌ لَّكُمْ إِن كُنتُمْ تَعْلَمُونَ}[البقرة:280]
Transliteration: Wa 'In Kāna Dhū `Usratin Fanažiratun 'Ilá Maysaratin Wa 'An Taşaddaqū Khayrun Lakum 'In Kuntum Ta`lamūna

Al-Sa’dy (Qur’an interpreter) said: The verse implements that if the debtor is finding trouble in paying the debt, the creditor must be patient and give him a chance until he is in a state of financial ease. It is obligatory upon the debtor to fulfill the debt whenever he got a chance to do so. If the creditor excuses him from the debt then it is better. (Tafseer Al-Sa’dy)

It is narrated by Aby Qatada May Allah be pleased with him: He was searching for a man debited to him, he was hiding from him. One day he found him, the man in debt told him “I am in a financial hardship” he replied to him “A’Allah” (do you swear in the name of Allah)” the man answered him Allah (yes I do). He replied saying: I heard prophet Mohamed -peace and blessings be upon him- say: “He who likes to be alleviated from the sufferings of the Day of Resurrection will relieve a debtor or excuses him from debt.” [Reported by Muslim]
«أن أبا قتادة طلب غريما له فتوارى عنه. ثم وجده . فقال : إني معسر . فقال : آلله ؟ قال : ألله . قال : فإني سمعت رسول الله صلى الله عليه وسلم يقول ( من سره أن ينجيه الله من كرب يوم القيامة فلينفس عن معسر ، أو يضع عنه )» رواه مسلم

Narrated by Buraydah: I heard the prophet -peace and blessings be upon him- say: “Whomever respites a debtor in a hardship, is rewarded with every day he respites him an Alms(Sadaqa)”, and I heard him again saying “ whomever respites a debtor, is rewarded with every day he respites him double the day reward as an Alms (Sadaqa)”. Then, I said O Messenger of Allah I heard you say ”Whomever respites a debtor in a hardship, is rewarded with every day he respites him an Alms(Sadaqa)” and then you said “Whomever respites a debtor, is rewarded with every day he respites him double the day reward as an Alms (Sadaqa)”. He replied saying: “ Every single day before the debt is due date an Alms(Sadaqa), when the debt is due and he respites the debtor then he is rewarded with every day double the day of Alms (Sadaqa). [Reported by Al-Monzery and authenticated By Al-Albani]
«من أنظر معسرا فله كل يوم مثله صدقة ثم سمعته يقول من أنظر معسرا فله كل يوم مثليه صدقة فقلت يا رسول الله سمعتك تقول من أنظر معسرا فله كل يوم مثله صدقة ثم سمعتك تقول من أنظر مسعرا فله كل يوم مثليه صدقة ثم سمعتك تقول من أنظر معسرا فله كل يوم مثليه صدقة قال كل يوم مثله صدقة قبل أن يحل الدين فإذا حل فأنظرة فله مثليه صدقه» اخرجه المنذرى وصححه الألبانى

Narrated by Aby Huraira May Allah be pleased with him that prophet Mohamed –peace and blessings be upon him- said: whoever respites a debtor in hardship or excuses him from debt, Allah will shade him in the Day of Resurrection under the shade of his thrown, where there will be no shade except his shade. [Reported and Authenticated By Al-Tirmizi]
«من أنظر معسرا أو وضع له ، أظله الله يوم القيامة تحت ظل عرشه ، يوم لا ظل إلا ظله» صحيح الترمذى

Also Narrated by Aby Huraira May Allah be pleased with him that prophet Mohamed –peace and blessings be upon him- say: There was a man who lent people, said to his servant, “If you find a debtor in hardship over look him for we seek Allah’s Pardon”. When the man died and met Allah, He Pardoned him. [Reported by Al-Bukhari]
«كان رجل يداين الناس ، فكان يقول لفتاه: إذا أتيت معسرا فتجاوز عنه ، لعل الله أن يتجاوز عنا ، قال: فلقي الله فتجاوز عنه» رواه البخارى

Imprisonment of whom with Capability to pay the debt

If the debtor refrains from paying the debt while being capable of it would be punished with imprisonment according to what prophet Mohamed –peace and blessings be upon him- said: “My rule Applies to the Capable (who has money but does not pay the debt), dishonoring and punishing him is permissible.” [Classified as Good by Al-Albani]
«لي الواجد يحل عرضه وعقوبته» حسنه الألبانى

Dear Kind Sheikh: Fatwa on taking a loan from a Haram (Forbidden source) source
Question: Is it permissible to take a loan from a person known that his income’s source illegitimate or has forbidden monetary transactions?


The kind sheikh Ibn Baz may Allah have mercy on him answered with the following. It is no allowed to take a loan from a person with such reputation, or deal with him financially knowing that his financial transactions are Haram (forbidden) and known for his usury practices or any of its like. So it is not permissible to deal or borrow from him, your duty is to refrain from doing so and distance yourself from him. But If his financial practices are mixed meaning having Haram (forbidden) and Halal (permissible) sources of income, its permissible to do so, while leaving it, is better. According to what prophet Mohamed -peace and blessings be upon him- said: “leave the suspicious matter to what does not make you suspicious.” [Reported by Al-Tirmizi and authenticated by Al-Albani]
«دع ما يريبك إلى ما لا يريبك» رواه الترمذى وصححه الألبانى

He also said: “He who is wary of vague matters has guarded his religion and honor.” [Reported by Al-Bukhari and Muslim]

«فمن اتقى الشبهات فقد استبرأ لدينه وعرضه» رواه البخارى ومسلم

He also said: “You know a sin from the feeling of discomfort in yourself, and you would not like people to know of.” [Reported by Muslim]

«والإثم ما حاك في نفسك ، وكرهت أن يطلع عليه الناس» رواه مسلم

So a believer stays away from doubtful matters. If you knew the nature of his transactions being forbidden and his trade is based on Haram this person isn’t eligible to have any kind of transaction or loan with. (Islamic Fatwa 2:416)

O Allaah, make what is lawful enough for me, as opposed to what is unlawful, and spare me by Your grace, of need of others.’

O Allaah, I take refuge in You from anxiety and sorrow, weakness and laziness, miserliness and cowardice, the burden of debts and from being over powered by men.’

O Allah relief the anxiety of those having worries of the Muslims, alleviate the hardship of those suffer, perform debt off the debtors and heal the ill amongst us and the Muslims.

Lastly, we praise Allah Lord of the realms.

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