Repaying an interest-based student loan
| Fatwa #575 | Category: Business & Trade | Country: Zambia | Date: 29th November 2021 |
| Fatwa #575 | Date: 29th November 2021 |
| Category: Business & Trade | |
| Country: Zambia | |
Question
Assalamualikum Warahmatullah.
Hazrat Mufty Saheb, one of my friends in the UK requested me to put forward the following question to you about his loan that he took for studies:
Took a student loan out with student finance England. 36k total. Now I owe 45k because of interest. I am paying out of my wage automatically each month around 50-75 a month. I am in two minds if I should continue with the monthly payments or find some arrangement where I pay it all off now. Difficulty with the second option is I am not in a financial position to borrow much as I am also looking to get a house. Question is: is the interest mixed in the full amount so every time I pay am I sinful? Or does the interest only begin once I’ve paid off the initial amount of 36k. If the second option is true then it gives me some time so save up and find the money myself with the intention of paying it all off at once in the future. Should I pay it off now or can I wait?
Answer
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
From a Shar’i perspective, an interest-bearing loan is a normal loan with an impermissible clause attached to it. This means that the principle amount loaned is permissible to make use of, and the impermissible clause of interest is rendered null and void.[1] This also means that the repayment of interest begins after one has paid back the principle.
It is not permissible to enter into an interest-bearing loan. One will be sinful for doing so. Therefore, you should make tawbah and istighfaar for entering into such an agreement.
You are in a better position to assess your financial status. Make an informed decision that both clears a debt off your conscious but still proves to be the financially wise thing to do.
And Allah Ta’āla Knows Best
Mufti Bilal Pandor
Checked and Concurred By:
Mufti Muhammad Patel
Darul Iftaa Mahmudiyyah
Lusaka, Zambia
الدر المختار شرح تنوير الأبصار وجامع البحار (ص: 430) [1]
(القرض لا يتعلق بالجائز من الشروط فالفاسد منها لا يبطله ولكنه يلغو شرط رد شئ آخر، فلو استقرض الدراهم المكسورة على أن يؤدي صحيحا كان باطلا) وكذا لو أقرضه طعاما بشرط رده في مكان آخر (وكان عليه مثل ما قبض) فإن قضاه أجود بلا شرط جاز ويجبر الدائن على قبول الاجود، وقيل لا
بحر وفي الخلاصة: القرض بالشرط حرام، والشرط لغو بأن يقرض على أن يكتب به إلى بلد كذا ليوفي دينه
وفي الاشباه كل قرض جر نفعا حرام، فكره للمرتهن سكنى الموهونة بإذن الراه