Paying some extra amount while repaying the loan amount

[Sardar Miyan]

Salam All While reading some question & answer on a local newspaper the reply given by the person of newspaper that as per Sunnah the person repaying the loan amount can pay some extra amount which does not constitute as interest or RIBA. I doubt very much on this being told by the Prophet. Can somebody kindly clarify? Thanks

[AbbsRay]

Salaam Sarder,

http://quransmessage.com/articles/riba%20FM3.htm

Whatever is in the Quran is what a Muslim follows, which is what the Rasool only preached and lead by example.

Most people if not all who follow the Sunna get their stuff from Hadith and Sunna books..

No one can ever go wrong by following the word of Allah because that is what the Rasool did. That is the Quran 

[Sardar Miyan]

Salam & Thanks posting Bro Joseph's article on RIBA. I just wanted to know if the person answering a question is right. I also has got a doubt in case of INFLATION as the amount of loan given will become by way of inflation. Is there any solution for this aspect?

[AbbsRay]

Salaam Sardar,

Well it goes like this in my opinion. Verse 2:282, Allah commands us to get a written contract for any debt we take and list all the terms. So when one is getting a loan, they will know what the loan has in it and if it is against Riba. They will than not go through with it I would think. When a loan is taken at a fixed low rate, whether there is an inflation or not, it will not affect it.

Every bank has different rules, but most if not all that have fees, riba, interest. That is factored in the monthly payments/installments for the loan.  I believe except the Islamic banks that some islamic countries have.

The best one can do is pay off as much as they can right away or try to refinance the Loan or get a bank to agree on something. I have never heard of a loan that goes towards amount one took only with no interest/finance.

If one is caught up in Riba, and did not know at the time, they just have to ask Allah for forgiveness and never repeat it again and do the best they can to get rid of the loan. I have never heard of a bank asking one to pay more than the agreement in the contract is. A pay off on the loan is something usually when a loan goes in bad standing or something that the bank agrees on due to the contract.

People do not realize that all credit cards are Riba. My God, you can sit your whole life paying it off. That is why one needs to live cash only and buy only what one can afford..


There is nothing I can find in Quran saying how it should be handled if one is in a situation as you mentioned.


Salaam

[Sardar Miyan]

My only point is that the lender of modern age may have to undergo double loss one is he is parting with his money for some period of time & then suffer the loss by getting less value of his money due to inflation. I am talking about hand loan give by a muslm

[Saba]

Salaam br Sardar ... from the link that sis Abbsrayray shared from br. joseph... what did you make of his comment

However, the creditor (who deposits their savings) is entitled to receive their principle amount back. As already mentioned, in today's economy, currency seldom holds the same value over a period of time. Therefore, it can be argued that any interest payment that covers the rate of inflation is permissible as this allows for the creditors principle amount to be returned.

Doesn't that answer your q??      Saba

[Sardar Miyan]

Sister Pl tell me where is written Quran about payment of inflated amount while repaying the loan? It becomes RIBA

[AbbsRay]

Salaam Sardar,

Can you please attach the link of the article you are referencing too?

I am extremly confused from the beginning of your question.  When you said person repaying the loan amount, I assumed BANK not a fellow muslim/person. "Inflation" as you mentioned, I was basing it on a loan from a bank stand. 

[Sardar Miyan]

I am talking only the Hand Loan given by a Muslim to another Muslim Brother without charging any kind of RIBA (Interest)In modern times there is element of Inflation prevailing in which case the amount of loan given to another Muslim brother becomes less on value due to inflation thus the lender undergoes loss.

[Sardar Miyan]

Salam sister Saba , What Bro wrote in the you referred is about savings account of bank which has nothing to do with interest or Riba.Can you please clarify why you referred this link to me? thanks

[Armanaziz]

Salamun Alaikum.

I find Brother Joseph's Article on RIBA quite insightful. Dr. Ahmad Shafaat has also written a thorough analysis of the term - the conclusions of which are somewhat in line with the ones by Brother Joseph.

http://www.islamicperspectives.com/Riba2.htm

Per my humble and straight forward understanding - any "excess/increase" charged in a transaction exploiting the vulnerabilities of the counterparty is potentially a Riba. In a loan transaction when the vulnerability of the borrower is exploited to charge him high interest - it will be Riba. But if both borrower and lender agree in advance in full satisfaction without any pressure or constraint about the terms of a loan (including any increased payment to offset inflation, cost of credit etc.) and document it with adequate witness and stick to it fairly - I do not see any "improper excess"/ Riba in it.

Another point which Dr. Shafaat has tried to emphasize is that from a strict Quranic view it is not possible to establish "Giving Riba" as a sin - unless if riba is defined / viewed as a "bribe" to get some undue favor from any authority. Giving a high interest on a loan being the victim of a situation cannot be a crime any more than getting robbed or getting raped or getting cheated.

May Allah guide us all to the straight route.

[Armanaziz]

Sorry the root link for Dr. Safaat's article would be this one:

http://www.islamicperspectives.com/RibaIntro.htm.

Regards,
Arman

[Sardar Miyan]

One bro told me that when you are giving loan to help a Muslim Bro why worry about getting less amount due to inflation? Let it be a charity & you will get reward from Allah.

[AbbsRay]

Salaam Sarder,

You are absolutely correct. Allah even says u will find it with him at the end.

[Armanaziz]

Dear brothers and sisters:

Salamun Alaikum.

If you lend to a poor person and he is in difficulty - why not you waive the entire amount of loan? If you do that with an intension of pleasing Allah - in sha Allah you will get the return for it someday.

This however does not mitigate the need for understanding RIBA correctly.

Think of yourself in a situation where you are custodian for a good sum of money for an orphan - or for your community. Do you keep the fund in interest-bearing account to allow it to appreciate, or do you keep it in cash/current account to allow it to loose value against time? That is when the moral dilemma of an incorrect understanding of riba will become problematic for you.

May Allah guide us all to the straight route.

Best regards,
Arman