Taking Interest: Difference between revisions

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==Basics==
The laws of interest are one of the most complex and relevant laws in today's economy and even in everyday life. See the numerous pages below for the details of arranging loans in a permitted fashion.
# In any case where a person owes a debt to another Jew whether it is because he borrowed money or because he hired him and owes him or because he rented something and didn’t pay yet, it is forbidden to pay more than the actual debt because of the prohibition of taking interest. <Ref>S”A Y”D 176:6, Rama Y”D 161:1 </ref>
*[[Categories of Ribbit]]: This page includes
# It’s forbidden for the borrower to do a favor to the lender if he would not have done it otherwise (if not for the loan). Even if the borrower would have done a certain favor if not for the loan, the borrower may not do that favor in public unless they have a good relationship and the borrower has done public favors for the lender in the past.<Ref>The Weekly Halachah Discussion (vol 2, pg 346) </ref>
**the definitions of biblical and rabbinic interest,
# There’s no prohibition to do a non-financial favor after the loan was paid up. <Ref> Birkei Yosef Y”D 160:11, The Weekly Halachah Discussion (vol 2, pg 348), Malveh Hashem (vol 1, 8:30) </ref>
**legal subterfuge sometimes which is permitted and sometimes forbidden,
# If neighbors have a good relationship and commonly borrow without being careful to return everything they borrow, then there is no prohibition of interest as the neighbors aren’t borrowing but rather gifting one another. <Ref> The Weekly Halachah Discussion (vol 2, pg 348) quoting The Laws of Interest (pg 35)</ref>However, if neighbors do not such a relationship then a neighbor who borrows a half a bag of sugar is borrowed only that amount may be returned unless the amount difference is insignificant (about which people don’t care) <Ref> The Weekly Halachah Discussion (vol 2, pg 348) quoting Brit Yehuda (Siman 17 note 6)</ref> or if one is unsure how much one borrowed one may return an amount to be sure the loan is repaid. <Ref> The Weekly Halachah Discussion (vol 2, pg 348) quoting Sh”t Minchat Yitzchak 9:88</ref>
**the laws of interest on rentals,
**whether it be renting real estate or or utensils,
**interest for worker salaries,
**lending objects,
**returning stolen money,
**interest with a loan of land or documents,
**forgiving interest,
**ribbit for [[pikuach nefesh]],
**taking interest temporarily,
**and giving interest to benefit the lender.
*[[Interest with Non-Jews]]: This page includes
**the laws of interest with a non-Jew, convert, non-religious Jew,
**lending between several parties some of which are Jewish and some non-Jewish,
**Jewish agent for interest deals, debt equity,
**managing someone else's money,
**as well as guarantors and co-signers.
*[[When Is It Permitted to Benefit the Lender]]: This page covers
**the topics of gifts or favors from the borrower to the lender,
**whether it be monetary or non-monetary, or even mitzvah opportunities.
**It also relates to a lender benefiting from a borrow's property,
**hiring or giving business to the lender,
**right of first refusal,
**paying taxes, fees, or debt for the lender.
**Payments to or from a third party are a separate discussion on this page as well.
*[[Buying on Credit]]: This page discusses all of the details of
**discounts for buying on credit such as subscriptions, early bird specials, or prepayments,
**benefiting the seller,
**contracts with a delivery company,
**return policies,
**and after the fact transactions established with interest.
*[[Guaranteed Low Prices]]: This page deals with the topic of
**paying for goods with a delayed delivery,
**future contracts of commodities,
**and a purchase of a service in advance without assuming risk.
*[[Penalty Clauses]]: This page is dedicated to
**penalties and late fees those which are permitted and those which are forbidden as interest.
*[[Borrowing Commodities]]: This page deals with
**borrowing commodities.
**such as if you want to borrow a bag of flour or dozen eggs from your neighbor.
**Lending commodities as part of a work contract is also discussed here.
*[[Returning Interest That Was Wrongly Collected]]:
**What to do with interest that was collected by accident or intentionally and now needs to be returned.
**Biblical vs Rabbinic interest
*[[Corporations and Partnerships]]:
**A classic iska with all of the terms and conditions are documented here.
*[[Financial Tools and Interest]]:
**Stocks,
**Merchant cash advance,
**Annuity,  
**Selling a loan
*[[Foreign Currency and Interest]]
**Lending or Trading Foreign Currency
**Purchasing a Commodity with One Currency and Repaying with Another
*[[Common Everyday Cases of Interest]]: Some of the common questions dealt with on this page include:
**Borrowing someone's credit card.
**Keeping the Change when Repaying,
**Selling a Check,
**Exchanging Favors,
**Family Members Lending,
**Loans of Small Amounts,
**Early Bird Specials,
**Car Loans, and
**Opening an Account at an Israeli Bank
*[[Heter Iska]]
**In order to make any loan with interest, which is standard in today's economy, a person needs to sign a heter iska to effectively change the contract from a loan into a partial or complete business deal. The halachot are complex and must be done with an official heter iska documents or reviewed by a rabbi.


==Heter Iska==
Because of the difficulty of abiding by all the details of loaning without interest, there’s an institution which is a contract set up by the Rabbis to conduct a business loan without violating the Torah prohibition of interest. This is only a general overview and not a procedure to be done oneself.
The Heter Iska is based on the idea that a money deposit is considered the property of its owner irrelevant of where it may be and so the profit that the guardian makes from it belongs to the owner. However, a loan is considered the money of the borrower and the profits belong to the borrower who is then only obligated to return the capital without interest. The Heter Iska splits the money in two, half (or a percentage) is a loan on which the borrower doesn’t pay any interest, and half is a deposit with which the receiver may use for business and the profits go to the owner. One condition of the agreement is that the borrower isn’t trusted to say that he lost money unless he proves it with acceptable witnesses and he isn’t trusted to say that he didn’t profit unless he makes a Shevuah (biblical oath) that he didn’t profit. Another condition is that if the borrower pays the agreed amount (above the original capital) he doesn’t need to prove that he didn’t make any more money. Therefore, at the end of term, the receiver returns the half which is a loan (while keeping the profit made from that half) and returns the deposit along with the profit he made from that half up to the amount agreed upon (and if he didn’t profit that amount, unless he proves it he must still pay the agreed upon amount, and if he profited more, he’s exempt from paying more).
There are many other conditions and one must consult with a reliable orthodox rabbi regarding each situation and how to draw up a Heter Iska. <ref> See Ribit Halacha LeMaseh chapter 20 </ref>


==References==
==Links==
<references/>
 
#[http://www.yutorah.org/lectures/lecture.cfm/826799/Rabbi_Hershel_Schachter/Ribbis Ribbis] by Rabbi Hershel Schachter
#[http://www.yutorah.org/lectures/lecture.cfm/773692/Rabbi_Yona_Reiss/Contemporary_Issues_in_Hilchos_Ribbis Contemporary Issues in Hilchos Ribbis] by Rabbi Yona Reiss

Latest revision as of 02:30, 3 December 2020

The laws of interest are one of the most complex and relevant laws in today's economy and even in everyday life. See the numerous pages below for the details of arranging loans in a permitted fashion.

  • Categories of Ribbit: This page includes
    • the definitions of biblical and rabbinic interest,
    • legal subterfuge sometimes which is permitted and sometimes forbidden,
    • the laws of interest on rentals,
    • whether it be renting real estate or or utensils,
    • interest for worker salaries,
    • lending objects,
    • returning stolen money,
    • interest with a loan of land or documents,
    • forgiving interest,
    • ribbit for pikuach nefesh,
    • taking interest temporarily,
    • and giving interest to benefit the lender.
  • Interest with Non-Jews: This page includes
    • the laws of interest with a non-Jew, convert, non-religious Jew,
    • lending between several parties some of which are Jewish and some non-Jewish,
    • Jewish agent for interest deals, debt equity,
    • managing someone else's money,
    • as well as guarantors and co-signers.
  • When Is It Permitted to Benefit the Lender: This page covers
    • the topics of gifts or favors from the borrower to the lender,
    • whether it be monetary or non-monetary, or even mitzvah opportunities.
    • It also relates to a lender benefiting from a borrow's property,
    • hiring or giving business to the lender,
    • right of first refusal,
    • paying taxes, fees, or debt for the lender.
    • Payments to or from a third party are a separate discussion on this page as well.
  • Buying on Credit: This page discusses all of the details of
    • discounts for buying on credit such as subscriptions, early bird specials, or prepayments,
    • benefiting the seller,
    • contracts with a delivery company,
    • return policies,
    • and after the fact transactions established with interest.
  • Guaranteed Low Prices: This page deals with the topic of
    • paying for goods with a delayed delivery,
    • future contracts of commodities,
    • and a purchase of a service in advance without assuming risk.
  • Penalty Clauses: This page is dedicated to
    • penalties and late fees those which are permitted and those which are forbidden as interest.
  • Borrowing Commodities: This page deals with
    • borrowing commodities.
    • such as if you want to borrow a bag of flour or dozen eggs from your neighbor.
    • Lending commodities as part of a work contract is also discussed here.
  • Returning Interest That Was Wrongly Collected:
    • What to do with interest that was collected by accident or intentionally and now needs to be returned.
    • Biblical vs Rabbinic interest
  • Corporations and Partnerships:
    • A classic iska with all of the terms and conditions are documented here.
  • Financial Tools and Interest:
    • Stocks,
    • Merchant cash advance,
    • Annuity,
    • Selling a loan
  • Foreign Currency and Interest
    • Lending or Trading Foreign Currency
    • Purchasing a Commodity with One Currency and Repaying with Another
  • Common Everyday Cases of Interest: Some of the common questions dealt with on this page include:
    • Borrowing someone's credit card.
    • Keeping the Change when Repaying,
    • Selling a Check,
    • Exchanging Favors,
    • Family Members Lending,
    • Loans of Small Amounts,
    • Early Bird Specials,
    • Car Loans, and
    • Opening an Account at an Israeli Bank
  • Heter Iska
    • In order to make any loan with interest, which is standard in today's economy, a person needs to sign a heter iska to effectively change the contract from a loan into a partial or complete business deal. The halachot are complex and must be done with an official heter iska documents or reviewed by a rabbi.


Links

  1. Ribbis by Rabbi Hershel Schachter
  2. Contemporary Issues in Hilchos Ribbis by Rabbi Yona Reiss
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