Conditions & Rulings

**Conditions and Rulings of Loans:** **1. No Conditional Reciprocal Loan:** A Muslim may not lend his brother on condition that he lends him back after repayment. Because the lender has stipulated a benefit, and "every loan that brings benefit is riba." - This includes: letting him stay in his house for free or cheap, lending his vehicle, or any other benefit - The Companions gave verdicts indicating this is impermissible - Scholars unanimously agree on its prohibition **2. Lender Must Have Legal Capacity:** Must be adult, sane, prudent, and capable of making charitable gifts. **3. No Stipulated Increase:** The lender may not stipulate an increase in the money he loaned. This is riba. - He only takes back the amount he originally gave **4. Voluntary Extra Repayment is Permissible:** If the borrower returns something better than what he took, or gives extra without condition or intent - this is valid as: - A gift from the borrower - Good repayment - Evidence: The hadith of Abu Rafi' above **5. Lender Must Own What He Lends:** He may not lend what he does not own. **6. Prohibited Modern Riba Transactions:** - Banks making loan contracts with those in need - Charging interest/fee in addition to the loan amount - Or agreeing on a loan value then giving less, on condition of returning the full amount - Example: Requesting $100,000, receiving $80,000, returning $100,000 - this is prohibited riba