Repayment of loan with smaller sum but with interest
Fatwa No: 315526

  • Fatwa Date:5-3-2016 - Jumaadaa Al-Oula 26, 1437
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Question

A few years ago, I took a loan that says that you do not have to pay anything back when your income stays under a certain amount. I knew that it could stay under that amount, so I took the loan. Now, many years later, I am considering working for a few years but with the only reason to give away all the money. Is this allowed or forbidden taking into consideration that I will have to pay back the loan with interest. Nevertheless, the amount that I will have to pay back is lower then the total amount of the total loan. So I am not sure if you can say that I will pay interest.

Answer

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

In principle, it was not permissible for you to take this loan as long as it was conditioned on interest because Allaah says (what means): {O you who have believed, fear Allaah and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from Allaah and His Messenger. But if you repent, you may have your principal – [thus] you do no wrong, nor are you wronged.} [Quran 2:278-279]

The condition of postponing the repayment until your income reaches a certain amount is a matter of difference of opinion in regard to its validity and obligation. The view of the majority of the scholars is that the postponement of repaying a loan is not valid at all. Al-Insaaf (in the Hanbali School) reads, “It is not permissible to postpone the repayment of a loan, and it does not become binding if it is stipulated in the contract. The lender is entitled to reclaim the loan before the end of the fixed term (deadline) because deadlines in loans are invalid. The evidence that the scholars provided is that the loan is a donation and Irfaaq (which is meant to provide relief) contract, so if a deadline is made obligatory for its repayment, then it would no longer be a donation..."

The Maaliki School of jurisprudence, on the other hand, is of the view that it is permissible to postpone the repayment of a loan but that it becomes binding if it is stipulated in the contract and that not knowing the deadline of repayment of the loan does not harm.

Al-Fawaakih Ad-Dawaani ‘ala Risaalat Ibn Abi Zayd Al-Qayrawaani reads, “It is valid to be unaware of the deadline in a loan, contrary to a sale.

Besides, Fat-h Al-‘Aliyy Al-Maalik reads, “If one borrowed money for an appointed time that he stipulated (in the contract), then it becomes binding without any difference of opinion in the (Maaliki) School.

Based on the above, you are obliged to repay that loan whenever you become able to do so. However, you are only obliged to repay the original loan and not its interest provided that you are not forced to repay them. If they oblige you to repay the interest, while you repent from it, then we hope that you are not sinful because whoever repents, Allaah accepts his repentance no matter how major his sin is. For more benefit, please refer to fatwa 86521.

Allaah knows best.

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