Conditioning an increase in a loan
Machine translationRead the Arabic original
Fatwa number ( 21762 )
Q: What is the ruling on the following contract, the text of which is: I acknowledge my debt to the Savings and Loans Bank for a social loan amounting to.... and I undertake to repay the amount in equal monthly installments of..... starting from....... knowing that I am committed to paying a fixed late fee of 10 D.K if I delay in paying one of the installments and am notified by a court bailiff, and 20 D.M if the notification is repeated, as
the full loan balance and fees become due if I delay in paying three consecutive monthly installments or violate the lending conditions according to the bank's regulations . End of quote. The question is: What is the ruling on the aforementioned contract? And what is the ruling on one who signed it while ignorant, and how should he act to clear his conscience? May Allah preserve you.
A: Conditioning an increase in a loan is explicit riba (usury or interest) due to the saying of the Prophet (peace and blessings be upon him): and the scholars have agreed upon this. Delay in repayment by the borrower does not permit an increase on him. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: What is the ruling on the following contract, the text of which is: I acknowledge my debt to the Savings and Loans Bank for a social loan amounting to.... and I undertake to repay the amount in equal monthly installments of..... starting from....... knowing that I am committed to paying a fixed late fee of 10 D.K if I delay in paying one of the installments and am notified by a court bailiff, and 20 D.M if the notification is repeated, as
the full loan balance and fees become due if I delay in paying three consecutive monthly installments or violate the lending conditions according to the bank's regulations . End of quote. The question is: What is the ruling on the aforementioned contract? And what is the ruling on one who signed it while ignorant, and how should he act to clear his conscience? May Allah preserve you.
A: Conditioning an increase in a loan is explicit riba (usury or interest) due to the saying of the Prophet (peace and blessings be upon him):
Every loan that brings benefit is riba
كل قرض جر نفعًا فهو ربا
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.