Taking Interest

Lending money on interest is one of the more severe prohibitions in the torah. The lender, the borrower, the guarantor, the witnesses, and even the scribe violate when engaging in an interest-bearing loan.

Basics

1. 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.
2. It is prohibited to lend with interest even if the borrower is wealthy and willingly agrees to pay the interest. It is prohibited even in cases where it seems entirely fair such as reimbursing the lender for the interest he was earning while his money was in a non-Jewish bank.
3. 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. 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) or if one is unsure how much one borrowed one may return an amount to be sure the loan is repaid.
4. It is permitted for someone to borrow another Jew's credit card to pay for a purchase and repay them the amount spent. Even if the purchaser receives points from the credit card company, that isn't considered interest since it doesn't come from the borrower. Additionally, the borrower may not the purchaser for any interest fees that the purchaser may incur if he pays late.
5. Some explain that a key factor in determining if something is considered a loan is whether the item is fungible and normally traded; if it is always traded to be kept that is a sale. Another factor that is used is whether the type of item being lent is similar to the item that is being returned; if they’re dissimilar it is like a sale.
6. There is no prohibition of ribbit upon the borrower whenever it is rabbinic ribbit.

Rentals

1. It is forbidden to charge interest for a rental.

Worker's Salary

1. It is forbidden to charge interest for wages of a worker.

Lending an Object

1. It is permitted to lend an object such as a tool to one's friend even on condition that if it breaks he will get you a new one even though it is more expensive than the one you lent him.

Rabbinic Prohibition of Interest

1. There are several different forms of interest that are prohibited only rabbinically. There are several practical differences if it is only rabbinic. For example, Rabbinic interest was not extended to charities. Additionally, one who receives biblical interest must return it but this does not apply to certain cases of rabbinic interest.
2. It is permitted for the yeshiva to give out student loans for tuition with interest since it is only a rabbinic form of interest in that the money was never given to the students to spend and a yeshiva is allowed to taking rabbinic forms of interest.

Returning Interest

Biblical Interest

1. A person who took interest that was in violation of Biblical ribbit must return the ribbit and if he doesn't the courts can extract it. Nonetheless the courts can force a person to fulfill his mitzvah to return the interest. He must pay with cash and not items worth cash.
2. Children of the lender who collected interest don't need to return it unless their father did teshuva before he passed away and didn't get to return it and in such a case they should return any unique item that their father collected as interest.
3. If a lender wants to do teshuva the lender should return the interest but the borrower shouldn't accept the interest in order not to prevent the lender from doing teshuva. That is only true if the majority of the lender's business and wealth is due to interest.
4. A transaction about which there is a dispute if it is Biblical interest or rabbinic interest if the lender collected it he doesn't need to return it and if the borrower grabbed it back he doesn't need to return it.

Rabbinic Interest

1. A person who took rabbinic interest is obligated to return it but the courts can't force him to do so.
2. A borrower who paid rabbinic interest can't force the lender to return it and if he grabs it out of the hands or domain of the lender he must return it.
3. A borrower who paid the rabbinic interest because a errant judge ruled he should do so is entitled to that money from the lender.
4. A lender who collected interest from lending a commodity and getting that same type of item in return (Seah Bseah) violated rabbinic interest and should return it but the courts can't extract it from him.
5. A person who took gifts to give a loan before the loan or a gift after the loan was repaid doesn't need to return it.

Returning Items

1. If was given a bunch of objects at a discount for the interest payment he must return all of the items he collected as interest or he needs to pay the fair price of the objects he collected. For example, if the borrower owed a dollar of interest and he gave the lender five pounds of wheat when the fair price was four pounds for a dollar, the lender must repay the borrower either all of the five pounds of wheat or the fair price of the five pounds of wheat which is a dollar and a quarter.
2. If a borrower gave a unique item for interest the lender must return it.
3. If the borrower stipulated to give a certain amount of interest and then gives an extra gift as well at the time of the payment that gift is considered rabbinic interest and the bet din can't force its return. Nonetheless, the lender has an obligation to pay it.
4. If a person stipulated to give an item as interest that item must be returned and not its value.

Deducting the Unpaid Interest

1. If the loan wasn't yet paid up and the borrower paid the lender rabbinic interest, some say that the amount of the rabbinic interest that was already paid is deducted from the capital and the difference is paid. However, others hold that the entire capital must be paid. The first opinion is the one accepted as the halacha.

Rental

1. If a person rented a house or any other item of the borrower for cheaper he needs to return the difference between the discounted price and the full value because that discount was Biblical interest that he collected.
2. If a person rented a house or another item of the borrower and overpaid, but the amount that he paid was all money that he gained from stipulated interest, he must return the full amount that was stipulated.

Document with Interest

1. If a person has a loan document stating that a person owes capital and interest the document should be ripped up.
2. A loan document with interest can be used to collect the capital and not the interest.
3. If the document included the capital and the interest and didn't specify what part of the obligation was capital and what was interest he can't use that document to collect anything.

Converting an Interest Loan into a Heter Iska

1. Some hold that it is evading ribbit and forbidden to convert an interest loan into a heter iska.

Discounts

1. Usually it is considered a rabbinic prohibition of taking interest to have a two tiered system in which the buyer could either pay a lower price now and receive the merchandise or can get the merchandise now and only pay later but at a higher price.
2. It is common in some businesses to require a deposit when a customer places a sale to ensure that the seller follows through with the sale. It is permitted for the seller to charge a lower price to the buyer who makes a deposit since the seller’s intent in requiring a deposit isn’t to charge interest but to ensure that the sale takes place.
3. It is forbidden to pay a camp an early bird special or discounted price if you pay early.
4. It is forbidden to pay for a sefer in advance before the printer published the sefer.
5. Using advanced discounted payments for a yeshiva or non-profit tzedaka organization is permitted since this is only a rabbinic form of interest.

Buying on Credit when the Price is Unclear

Tarsha

1. If there is no fixed price in the market for an item it is permitted to pay for it in advance and have it delivered later.
2. It is forbidden for the perspective lender to counter the request of a loan with a subterfuge of having the lender borrow a commodity to then resell it to the lender for a cheaper price. Since the borrower originally requested a loan the borrower may not sell the commodity for a cheaper price when when the price is unclear in the marketplace.
3. If the buyer's intention is purely to buy the item on credit in order to sell it immediately for a cheaper value that is considered a prohibited since it as though the cheaper price is stipulated as the value of the loan and yet he agreed to repay a higher amount.

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1. Downpayments and early bird specials. 63b rav nachman says you can’t do an early bird special unless it is yesh lo. 65a he says you can do a downpayment and get the item now and pay more later as long as you don’t specify the price and tosfot 65b and 63b adds that if its price is evident in the market it is forbidden.

Rama 173:7 says you can do poskin on parah or talit even ein lo. That’s based on tosfot 63b that says if there’s no shuma then we’re not calling it agar natar we’re calling it tarsha. But what about the fact it might go up on its own like poskin al hapeirot? Bear hagolah and tiferet lmoshe - peiro will have a shuma later but parah will never Shach - parah is yatzah shaar in that the factors necessary to determine its price like per pound is shaar kavuah Taz argues on rama and says its only if it didn’t go up Chavot daat 173:11 there’s no shiybud haguf here if you give them a specific item, but there is for the general fruit which you can give them any fruit Rav chaim in gemara and tos not rama - with ashray bmata that’s partially yesh lo

Partnership of Jews and non-Jews

1. It is forbidden to charge or take interest from an individual Jew or group of Jews. Some poskim allow borrowing or lending on interest to a partnership of Jews and non-Jews if the non-Jews comprise at least half of the group to which one is lending or from which one is borrowing.

Corporations

1. Some poskim say that it is permitted to lend or borrow on interest from a corporation even if it is owned by Jews because halacha views the corporation as a dummy entity that isn’t Jewish. Others say that it is only permitted to lend on interest from the corporation but not borrow on interest from them, while others still forbid both borrowing and lending with interest from a Jewish corporation.

Non-Financial Benefit

1. 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.
2. While some poskim prohibit the borrower from thanking the lender for the loan under the prohibition of ribbit devarim , other poskim are lenient and allow a simple thank you.
3. There’s no prohibition to do a non-financial favor after the loan was paid up.

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 without consulting an Orthodox Rabbi.

The Heter Iska splits the money in two, half (or a percentage) is a money deposit and half is a loan. The borrower may use the half which is a money deposit for business but as the deposit is considered the property of its owner wherever it may be, the profit that the borrower makes belongs to the lender. 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.

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.

1. Is using a heter iska permitted initially or only after the fact or in a difficult situation? Some poskim hold that it is only permitted in extenuating circumstances in order to make a parnasa. Others hold it is totally permitted when done correctly. Nonetheless, one should ensure not to use it at the expense of doing the chesed of lending another Jew money for free when that is possible.
2. One may not use the heter iska to charge an amount that is unreasonable for the borrower to have made in his business or investment. Therefore, when using a regular heter iska, half loan half investment, one can only charge a percent that is reasonable for the borrower to have made with half of the money. That is, if the heter iska is to allow charging 7% for the entire iska transaction, it is only permitted if it is reasonable that the borrower will be able to make 14% on the iska, leaving 7% for the gain of the half investment. Otherwise charging higher rates is forbidden and oppressive to the borrower.
3. A heter iska can only be used if the borrower is using the money for a business or investment but not if he is using it for paying bills or household expenses.
4. Therefore one shouldn't overdraft from a Jewish or Israeli bank for personal needs since a heter iska doesn't help for that case. This is only permitted one has a business producing profits with which the heter iska can be applied.
5. Some poskim permit using a heter iska if one has another business, assets, or savings plan any of which that are making profit and if not for the loan one would have sold that business, assets, or savings. The reason that it is permitted is because the heter iska could apply to that investment and its profits. If not for the loan one wouldn't have sold the business, assets, or savings plan anyway it is forbidden.
6. The contracts that are made with a heter iska shouldn't include terms of interest but rather profits.
7. The poskim work to explain why the heter iska isn't considered a harama, legal subterfuge to avoid ribbit.

Conditions of the Heter Iska

1. Some heter iska's add a condition that if the borrower doesn't appear in bet din each erev rosh chodesh to submit his claims for his losses he has admitted that there were no losses. Some argue that this condition should not be added.

Complete Pikadon Heter Iska

1. An alternate heter iska that is in use today is where the entire sum is considered an investment and there's no loan at all. Some argue that one shouldn't use this heter iska.

Lending Commodities

1. It is rabbinically forbidden to lend items for the same quantity of that item.
2. It is Biblically forbidden to lend an item for a greater quantity of that item. For example, lending 100 apples for 120 apples is Biblical interest.
3. It is forbidden to lend an item to get back the same type of item. This is called Seah B'seah. For example, lending out a 5 pound bag of flour to get back another bag of flour is forbidden.
4. This type of rabbinic ribbit is permitted if the borrower has some of the same type of the item he is borrowing. For example, if someone has one egg and wants to borrow five more eggs they can do so since they already have one.
5. Some poskim hold that it is permitted to lend an item that is small or cheap and people wouldn't care about the fluctuation in the price such as lending a loaf of bread.
6. It is forbidden even if one uses the language of selling them an item and the buyer will later sell back that item since the price might fluctuate in between and it is like a loan and not two sales.

Yesh Lo

1. If a person owns some of the commodity that he is borrowing he can borrow as much as he wants and it is like he sold the lender his commodity. It works even if the borrower only has a little bit of that commodity since it is like he borrowed it several times each time selling to the lender his commodity. It is permitted to do such a loan all at one time.
2. Initially both parties should be aware that the borrower has some of that commodity. If they weren't aware of that, the transaction is nonetheless permitted and can be collected.
3. Ideally both parties should be aware that it is as if the borrower is selling his commodity to the lender.
4. The borrower needs to actually own some of the commodity to permit this transaction and it isn't enough that people owe him some of that commodity. If the borrower has some of that commodity that is deposited with someone else that is sufficient to consider him yesh lo. If the borrower has some of that commodity but he borrowed it previously in a permitted fashion, some poskim say that it is sufficient to consider it yesh lo.
5. It is insufficient for the borrower to have enough money or property to be able to repay the loan as long as the borrower doesn't own any of the commodity and there isn't any fixed marketplace price.

Yatza Hashaar

1. If there is a price that is fixed in the marketplace for that commodity it is permitted to lend that commodity.
2. It must be known to both parties that there is a fixed price in the marketplace for that commodity.
3. It isn't necessary for the borrower to have the money needed to buy the grain in the marketplace as long as there is a marketplace price it is permitted.
4. Some say that it is forbidden to lend commodities when the marketplace price is fixed if the lender specifies the time that the commodity needs to be returned, however, the halacha doesn't follow that opinion.
5. If one place has a fixed marketplace price other nearby places can rely on that place.

One Commodity for Another Commodity

1. If one lends one commodity for another commodity of the equivalent value it is forbidden perhaps the value of commodity that needs to be returned will increase in price. This is forbidden even if the borrower has some or all of the quantity of the commodity necessary to repay the loan and it is forbidden even if the marketplace price for the commodity to be returned is fixed.
2. This is only forbidden when one states this with the language of a loan but not if one says that one is selling one commodity for another.

Demanding Repayment When It Is More Expensive

1. If the lender demands the borrower to repay the loan specifically at a time when the commodity is generally more expensive in price that it is forbidden unless the borrower has some of the commodity.
2. If the lender demands the borrower to repay the loan specifically at a higher price it is forbidden unless the borrower has some of the commodity.

Stocks

1. It is permitted to buy stocks and it isn't considered ribbit since it is an investment.
2. Short selling is a violation of borrowing commodities with interest. This type of transaction between two Jews is forbidden since the leniencies of borrowing commodities, namely, having a fixed market price that endures for a long time or having a position in that the stock one is short selling, are inapplicable. For a Jewish marketplace this is a serious issue because either way there is an interest charge for borrowing the stocks for the time. Therefore, these issues need to be solved with a heter iska.
3. Buying stocks on margin is forbidden if the brokerage is Jewish since it is lending to the investor money to be able to buy the shares and charging them interest for that loan. This is Biblical interest, but it can be permitted with a heter iska. A regular heter iska doesn't work for this case.
4. Buying a future contract of stocks doesn't involve interest.
5. If a person leaves money in a Jewish investment account and it accrues interest leaving money there is forbidden since that would be Biblical interest. However, this transaction can be permitted with a heter iska. Some poskim would permit collecting interest if the brokerage firm is incorporated.
6. Buying and selling options is permitted.

Lending Commodities as Part of a Work Contract

1. If a person hires a worker to plant a field if the employer wants to provide the seeds as a loan and get repaid afterwards he can do so. If it is common for the worker to supply the seeds to plant it the employer can arrange this loan at any time, but if it is common for the employer to supply the seeds to plant it then the employer can only make this arrangement if the worker didn't begin his work.
2. This leniency wouldn't permit a commodity loan if the worker will use the commodities for anything other than for his work.

Involvement with Interest

1. Anyone involved in the interest transaction, such as the lender, buyer, witnesses, scribe, or another intermediary is violating the halacha of ribbit.
2. It is forbidden to give a gift when returning a loan when if one doesn’t specify that it is because of the loan.

Foreign Currency

1. Rashba respona 4:287 forbids lending money of one currency for another currency since the coins change fixed with respect one to another.

Expired or Altered Currency

The system of coins used in the days of the Gemara and Shulchan Aruch were intrinsically valuable commodities, such as silver or gold. In that system the size and weight of the money and the value of that metal determined the value of the coins. This is known as commodity money and is associated with the theory of economics metallism. Another system used is representative money which could be used to redeem a commodity; this is also known as the gold standard. In 1971, America replaced this system with fiat money, theoretically understood by chartalism, which has no intrinsic value and no representative value but has a value based on the government.

Fiat Money (Chartalism)

1. Today most money is paper or digital money, which has no intrinsic value and not representative of a commodity value. It is evaluated according to the assigned value according to the government and world markets.
2. It is forbidden to lend money and charge for inflation.
3. If a coin is invalidated and replaced with a new coin in a fiat money system the new coins need to be repaid since the size and weight of the old or new coins are irrelevant to the value of the coin. If the new coins has a different purchasing power compared to the old coins, if someone lent money in an old coin one must return the new coins according to the value the new coins have in relation to the old coins.

Commodity Money (Metallism)

1. If the new currency is the same size and weight as the old currency but its purchasing power is different one can simply repay the loan with the new currency.
2. If a person lent someone money in a currency and then that currency become invalidated and was replaced with a new coin, if the new coin is thicker or weightier than the old one, whether or not one can simply repay the loan with the new currency depends on the following factors:
   1. If the prices of the marketplace reflects the new coin's thickness or weight then one can't repay the loan with the new currency, rather one should pay the amount of the new coins so that the sum total equates to the amount of silver of the old coins borrowed.
   2. If the prices of the marketplace do not reflect the new coin's thickness or weight and simply changed prices because of changes in supply and demand, one can repay with the new currency unless the new coin is more than 25% larger, in which case one needs to repay the amount of silver borrowed with the old coins.
3. If one should have paid the new coins up to the quantity of silver that was borrowed and instead one repaid the loan with the new currency some say that it was a violation of Biblical interest and some say rabbinic.
4. We rely on non-Jewish experts to tell us that the coins are more or less than 25% larger than the old coins. If you are asking a hired professional economist they are trusted and if you're asking someone else you should ask two non-Jews one not in front of the other.
5. If the government establishes how the old loans should be repaid then one can follow that standard based on dina dmalchuta dina.

Future Contracts of Commodities

1. It is forbidden to pay in advance for the later delivery of a commodity since it is possible that the price of the commodity will rise. The two ways to permit this is if the seller has the commodity already or the marketplace price is already fixed.
2. If the price of the commodity drops the buyer can renegotiate his part of the deal and buy it for cheaper.

Marketplace Price Fixed (Yatza Hashaar)

1. If the price of the marketplace is fixed it is permitted to pay in advance for the later delivery of a commodity. The reason is since the marketplace price is fixed it is possible for the seller to purchase the commodity immediately with the funds of the buyer. Therefore, it is as though the commodity is already in the position of the seller.
2. This leniency works independent of the leniency of the seller owning the commodity (Yesh Lo).
3. It is forbidden for the seller to charge less than the marketplace price since the buyer is paying in advance, even though the marketplace price is fixed.

Has a Position of that Commodity (Yesh Lo)

1. If the seller of the commodity already has the commodity at the time of the transaction it is permitted. Since the seller has the commodity at the beginning we can view the transaction as though he sold the commodity immediately for the fair marketplace price. Even though they didn't formally have the buyer acquire that commodity at the beginning of the sale since this is only rabbinic interest it is permitted.
2. The seller has to have the full quantity of the commodity to fulfill his end of the deal at the time of the transaction for this leniency to apply. It isn't similar to the rules of seah bseah since this is considered a sale and not a loan. Therefore, it is necessary for the seller to sell his commodity to the buyer and having part of the commodity is insufficient, whereas for a loan, it is possible to view it as though the borrower lent out his commodity multiple times since something that he lent out remains in his property.
3. The seller is believed to say that he has the commodity he is transacting.
4. This leniency is specific to where the seller has the commodity and doesn't extend to where the seller has cash with which he could use to buy the commodity.
5. It is permitted to charge a lower price than the marketplace price if the seller has the commodity at the time of the transaction. This isn't similar to relying on the leniency of Yatza Hashaar.

Repaying a Loan with a Future in Commodities

1. When a person purchases a commodity at a future date by making an advanced case payment there are two possible leniencies: if the seller has the commodity or if the marketplace price is fixed. However, if the original transaction is a result of a loan that the seller owed to the buyer and he is using that loan to purchase a future of commodities this transaction can only be permitted when the seller owns the commodity. The reason for this distinction is because the leniency of having a marketplace price fixed is that it is possible for the seller to cover his obligation by purchasing the commodity in the marketplace at the time of the transaction. However, if he is doing this transaction as a repayment of a loan that unpaid debt can't possibly be used to buy a commodity in the market.
2. A person purchased a commodity at a future date with a preexisting loan that the seller owes him. As explained this is only permitted if the seller has that commodity. If later at the time of the delivery date they renegotiate that the seller will exchange the first commodity with another one, it is only permitted if the seller has the second commodity.
3. A person purchased a commodity at a future date by making an advanced cash payment. Later when the commodity is due to be delivered he renegotiated with the seller to exchange the commodity he was supposed to acquire with another commodity for the current value of the commodity he is owed. This transaction according to some is only permitted if the seller owns a position of the second commodity that is sufficient to cover paying out this transaction. However, according to others it is permitted as long there is a fixed marketplace price.

Stipulations for a Default on a Loan

1. It is forbidden for a person to stipulate that if the borrower can't repay his own he must give a certain commodity to the lender for the price of the commodity that it was worth at the time of the loan. Since this transaction was conditionally a loan it must follow the rules of a loan exchanged for a future in commodities.

Future Contracts

1. It is permitted to do a future contract for a commodity or stock when one doesn't buy the commodity now at all and doesn't pay for it but merely pays a margin deposit. That is considered as though one agreed to buy or sell something at a later date and there's no advanced payments.

Collateral Fields

1. It is forbidden for a lender to use the collateral that the borrower provided without certain conditions.
2. If the lender eats the fruit of the field of the borrower that was a collateral some say that it is Biblical interest, while others hold it is only rabbinic interest.

Legal Subterfuge

1. A person asks for a loan of $100 and the lender isn't interested. The lender counter offers him to lend him $100 worth of a commodity and he can sell it for that value and use the money. Then the borrower takes the commodity worth a $100 and offers the lender to buy back the commodity for $90. If the buyer accepts that deal it is forbidden since in effect the borrower borrowed $90 and is obligated to return $100 which is interest.
2. This is considered legal subterfuge and even though it is forbidden to arrange, if it is already arranged, according to Sephardim the borrower can repay the full loan. However, according to Ashkenazim the the borrower shouldn't repay the full value of the loan since this is considered rabbinic interest.
3. If between the time of the loan and the time of the resale of the commodity to the lender the price of the commodity dropped to $90 then it is permitted to sell the commodity back to the lender.
4. If the borrower never took the commodity but everything was transacted orally it is considered rabbinic interest in all circumstances.
5. If the borrower stipulated with the lender that they would go through with this entire series of transactions it is certainly interest.
6. There is a dispute if it is permitted if the borrower only sells the commodity back to the lender at another time.

Renting a Field to a Borrower

1. A person borrowed money and as a collateral gave the lender a field. Generally, the lender may not make use of that field without certain conditions. The lender then rents out the field to the borrower for a fixed rate. That is considered legal subterfuge to charge a borrower interest on his loan and is forbidden.
2. If the entire series of transactions were stipulated from the beginning it is certainly forbidden.
3. If the field as a collateral was used by the lender and for that use a deduction was made to the loan for each year until the entire loan would be paid off, then if there is someone else in between the borrower and lender it is permitted. That is, if the lender rents out the field to someone else and that person then lends it to the borrower it is permitted.
4. It is permitted to sell a field to someone and then rent it from them.

Judging by the Time of Stipulation

1. It is considered Biblical ribbit to lend 100 items to get 120 items in return, even if at the time of the return those 120 items afterwards are the same price as the 100 items were at the time of the original loan.
2. It is considered rabbinic ribbit to lend 100 items to get 100 items in return even if at the time of the return those 100 items are worth more than the price of the 100 items were originally.

Land or Documents

1. Ribbit applies to lending land in order to receive more in return or the same land together with something else in return. This is considered Biblical ribbit.
2. Ribbit applies to money given in a document.

"Keep the Change"

1. It is forbidden to lend money in order to get less than a prutah more than he lent. After the fact if one collected interest worth less than a pruta some hold that it doesn't need to be returned.
2. There is no time limit to be considered a loan, even a loan for a moment is a loan and is subject to interest. This is true even if the time lapse isn't for the time-value of money but purely because of a convenience.
3. It is questionable if it is permitted to borrow something and return back a tiny bit extra. For example, if you split a cab and one person pays the whole fare and the other person owes him $4.96, it seems problematic to pay the full $5 and say keep the change. The reason is that giving the extra four cents is interest which you're paying at the time of the loan. Many poskim permit it when it is an amount that is insignificant to both of them (that if it fell on the ground they wouldn't pick it up) and some specifically permit it when you say give the change to tzedaka.

Checks

1. Some poskim allow selling a check that is able to be cashed immediately for less than its face value.

Repaying Interest

1. Biblical ribbit must be returned otherwise it is permitted to seek a bet din to collect it.
2. There is a religious obligation to pay back derabbanan ribbit. Some say that this doesn’t apply to ribbit paid before and after the loan.
3. A person who took interest should return it. If he offers to return it and the other person forgives his fellow from paying him back the person who took interest can keep it.

Mechila in Advance

1. It is forbidden to take a loan in order to pay back interest as a gift even though it is a willing and intentional gift.
2. It is ineffective and forbidden to arrange in advance that someone will pay you interest and then forgive the interest so that it shouldn’t need to be returned.

Mechila After the Fact

1. If a person incorrectly took interest one should return it but if the borrower forgives the loan (mechila) the lender doesn’t need to return it.
2. If a person forced the borrower to swear that he would forgive the interest after he paid it, that is forbidden to give and take interest and the vow is in invalid.
3. The mechila has to be explicit and can’t be assumed by the lender since the borrower didn’t ask he forgave it.
4. Ideally instead of having the borrower forgive the interest the lender should really return the interest to fulfill the mitzvah of returning interest.

Matana Al Menat Lehachzir

1. If the borrower gives the lender a temporary gift that will later be returned in addition to the capital that is considered ribbit.

Small Amounts

1. It is forbidden to gift interest even in small quantities.

Talmidei Chachamim

1. A Talmid Chacham who borrowed from another Talmid Chacham food he can return him some more than he got up to a fifth since they are so careful about the halacha it is obvious that they are giving purely as a gift and not because of the loan.
2. Some say that it is permitted for a Talmid Chacham to stipulate with another Talmid Chacham to pay him a little bit of interest since it is understood to be a pure gift and because of the loan. This leniency should be relied upon sparingly so that people don’t mistakenly extrapolate.
3. Who is a Talmid Chacham? Some say that he needs to be knowledgeable in most areas of the Talmud and can answer questions properly and extrapolate halachot from one area to another and is very scrupulous of the halacha. Some say that it is referring to a student of Torah who knows the laws.
4. It is unclear if the wife of a talmid chacham is afforded the status of a talmid chacham for this halacha.

Purchasing Futures of a Commodity (Poskin Al Hapeirot)

1. You can buy gourds that are small in the field when they’ll ripen even if the price is cheaper when you pay now.
2. If you specify that if the price goes up then it is an investment and if it goes down it is a loan, that is invalid and is considered a loan with ribbit.

Exchanging Favors

1. It is forbidden to ask your friend to work for you today and you’ll work for them at a later date if the second job is harder or the value of the second work is more than the first one.
2. For example, it is forbidden to ask your friend to give you a ride somewhere and next week you’ll give them a ride somewhere else that is further or would take more time.
3. It is forbidden for someone to watch someone else’s children in exchange that they will watch your children at another time if watching your children is harder or it is for a longer period of time.
4. It is permitted to exchange jobs even if the second is harder if the jobs being done are for a partnership and the people in question are partners.
5. If one person asks his friend to build his sukkah with him in exchange for him helping his friend build his sukkah if the second one is harder it is forbidden.
6. It is forbidden for a teacher to arrange for someone to substitute for him in exchange for him doing the same for that person if the second job is more difficult or is worth more.
7. It is a dispute if isn’t clear if the second job will be harder or worth more than the first job if it is permitted to initiate such a deal. One should be strict.

Exchanging Loans

1. It is forbidden to trade loans because doing so is taking and paying the value of a loan.
2. If after someone lent you money, it is permitted to lend them back.
3. It is forbidden for a loan gamach to stipulate that only members who lent money to the gamach may borrow from it because doing so is like lending somemone in order to get back a loan. A rabbi should be consulted how to set up such a gamach.

Leniencies

1. If there is no reason that one job should be done before the other one it is permitted since the exchange is a simple trade of favors and there is no intention to charge for the passage of time.
2. If the people making the arrangements aren’t careful to be exacting then it is permitted since it is just one doing a chesed for the other. For example, if neighbors watch each other’s children from time to time and they don’t meticulously calculate how many times they watch each other’s children it is permitted.
3. If the two people arranged to do each other’s jobs simultaneously there is no prohibition of ribbit at all.
4. Some hold it is permitted if you don’t stipulate from the beginning that they would exchange favors as long as the difference between the difficulty or price of the favors isn't great.

Who can you take interest from?

Non-Jews

1. It is permitted to lend to and borrow from non-Jews with interest.
2. Nowadays in Israel it is forbidden to lend non-Jews money with interest since it is possible to do business with Jews exclusively. Yet it would be permitted in order to make a livelihood but not to make oneself wealthy. Some poskim are lenient even in Israel.
3. Even outside Israel one should be strict if one can. Some say that for an impersonal bank it is permitted since one hardly interacts with the non-Jews.
4. It is permitted to borrow with interest from non-Jews.

Non-Religious Jew

1. It is permitted to lend to a non-religious Jew with interest if he was brought up religious and later became non-religious. Initially this should be avoided.
2. One may not lend a non-religious Jew who is raised as a non-religious Jew with interest. This applies to conservative and reform Jews today.
3. Some say that it is permitted to lend the Karaites with interest.

Family Members

1. It is forbidden to charge interest even between a parent and child even if they aren’t Bar/Bat mitzvah even though it is understood to be a gift. This applies both to a parent borrowing from a child and a child from a parent.

Gifts or Favors from the Borrower

1. It is forbidden to give a gift or interest even before or after a loan from another Jew and certainly during the loan. If someone does so they violated avak ribbit.

Before or After the Loan

1. Some say that it is permitted to give a gift before or after the loan from another Jew if you don’t specify that it is because of the loan. However, others disagree. Ashkenazim follow the first opinion and Sephardim the second.
2. All agree that it is forbidden if it is a large gift or if you specify it is because of the loan. The determination of a large and small gift depends on the people and context. Any gift which people would understand is in gratitude for the loan is forbidden.
3. Some say that everyone agrees if one’s intention is to give it because of the loan it is forbidden. However, there is an opinion that it is permitted if one doesn’t specify that it is for the loan. For example, paying to be able to buy on credit is forbidden.
4. Some say that it is permitted to give a gift before or after the loan from another Jew if you usually give the lender such gifts. It is permitted for a borrower to hand a tissue to the lender since it is a common courtesy.
5. If it is a long time after the loan it is permitted to give a gift that isn't because of the loan. This statue of limitations to gifts depends on the context. As long as it is clear that it is because of the loan it is forbidden, but once it isn't clear that it is because of the loan it is permitted.
6. If the borrower and lender have become friends because of the loan and at this point in their relationship it would be normal to give such a gift for the friendship such as for a celebration and not because of the loan it is permitted. This is only permitted if it is clear that the gift is for the friendship and not the loan.

Mitzvot

1. It is forbidden to teach one’s lender or his son Torah during the duration of the loan unless he did so regularly before the loan.
2. It is forbidden to do the pidyon haben of one's son with one's lender.
3. It is forbidden to buy an honor in Shul for one's lender.

Favors, Kind Gestures, and Saying Thank You (Ribbit Dvarim)

1. It is forbidden to give any benefit to the lender even a nice word or greeting them with a simple word hello can be forbidden if a person didn’t usually say hello before the loan and one is doing it because of the loan. This is called Ribbit Devarim and is a rabbinically forbidden form of ribbit.
2. Ribbit Devarim only applies during the duration of the loan and not before or afterwards. Some say that even after the loan is repaid it is forbidden to thank someone for a loan explicitly because of the loan; also it is forbidden to flatter someone to give you a loan before the loan begins.
3. Thanking the lender is questionable if it is permitted since it is giving something to the lender in return for the loan in addition to the original loan. Some are lenient since it is a generally accepted custom to thank people for very small favors and so it is rude to do otherwise and if the entire expression of gratitude is minimal it is like it was normal to do beforehand.
4. It is forbidden to write in a sefer thank you to someone who lent you money in order to publish a sefer.
5. it is forbidden for the lender to ask the borrower for any favor even something simple as alerting him when someone will come to a certain place.
6. It is forbidden to ask the borrower to do something for you even if he would have done so anyway.
7. The borrower can’t go to the simcha (celebration) of the lender unless he would have done so anyway.

Business Obligations Upon the Borrower

1. It is forbidden to lend money on condition that the borrower does business with him or someone else specifically. There is a doubt if it is Biblical interest or only rabbinic interest.
2. If the lender has a job it is forbidden to stipulate that the borrower use the lender for his services whenever he needs that type of service.
3. If the borrower has a job it is forbidden to stipulate that the borrower do that job even for a fair price for the lender whenever the lender needs it.
4. If there is no stipulation it is nonetheless forbidden for the borrower to do business with the lender to hire him specifically. If the reason one is hiring him isn't because of the loan but because he has a better deal or the like it is permitted.
5. If the lender is poor it is forbidden for the borrower to give him charity aside from repaying the loan. If he would have given him charity anyway if not for the loan it is permitted.
6. Many poskim say that it is forbidden for a seller to allow people to buy on credit only if they spend a certain amount. The reason is that having a minimum to buy on credit is like making a loan to the buyers on condition that they do more business with you.
7. It is forbidden for the borrower give a lender a loan during or after the original loan unless he regularly did so previously because doing so is considered a favor to the lender. This is only an issue if the second loan is larger or for a longer period of time, otherwise some poskim hold that it is permitted to give the lender such a loan.

Following Instructions of the Lender

1. It is forbidden for the lender to tell the borrower that I will lend you on condition that you convince someone to give you a gift.

Paying When Debt Is Unclear

1. If the lender and borrower can't agree on the amount of the debt the borrower can pay the higher of the amounts. Ideally he should specify that it is a gift and not for the loan.

Lender Benefiting from the Borrower's Property

1. It is forbidden for the lender to benefit from the borrower's property for the duration of the loan without the permission of the borrower. The reason is that it appears to the public as though the lender is only benefiting from the borrower's property because of the loan and as such the lender is taking interest.
2. Before or after the loan it is permitted for the lender to benefit from the borrower's property if it is the type of item that he would have done so even if not for the loan.
3. If the borrower before the loan regularly lent his property to the lender even without his permission then it is permitted to do so during the loan.
4. If everyone regularly borrows this type of item without the permission of the owner then it is permitted for the lender to borrow that item since it doesn't appear as though he is benefiting from the borrower because of the loan.
5. It is forbidden for the borrower to let the lender rent a house of his or that he rented for less than the fair rent.

If Lender Benefited from the Borrower's Property

1. If someone lent money he may not let the lender use his house for free. If he does that is considered rabbinic interest. If the house is up for rent then the lender needs to return the value of the rent. If the house isn't for rent and the owner wouldn't rent it, some say that it needs to be returned, while others holds there's no obligation to return it.
2. If someone stipulates that his borrower can use his property for free, if the house is usually rented out, that is Biblical interest and must be returned. Even if it isn't usually rented out it is still rabbinic interest and must be returned.
3. If the stipulation to use the borrower's property happened after the original loan but it happened when they decided to extend the loan, it is a dispute if it is Biblical interest.

Hiring the Lender for a Job

1. It is forbidden to stipulate that you will lend me money and I'll hire you for a fair price because that is considered as though one is paying them for the loan. There is a dispute if this is Biblical or rabbinic interest.
2. It is forbidden to lend money to someone and in the same situation be hired by him for a fare price because that appears to be interest. However, it is permitted if it is done in two settings. Alternatively, it is permitted if the loan is given as a complete gift even though the borrower is likely to give the gift back.

Arrangements of Loans Between Several Parties

Lending A Non-Jew's Money to A Jew with Interest

1. If a person borrowed money from a non-Jew with interest it is forbidden to then lend that money to another Jew with interest.
2. If a person borrowed money from a non-Jew with interest and then before he returns it another Jew wants that loan and is willing to pay the interest to the non-Jewish lender, one may only give that loan to the second Jew under one of two methods. Both of these methods free the first Jew from any financial relationship with the second Jew:
   1. The non-Jew tells the first Jew to leave the money in a certain location and he will be exempt and then the second Jew takes it from there.
   2. The first Jew returns the money to the non-Jew and he then gives it to the second Jew. No words need to be spoken since it is understood that when the non-Jew took the money from the first Jew he was exempting him from his loan.
   3. It isn't a solution for the non-Jew to simply tell the first Jew to hand the money over to the second Jew and he'll be exempt since that appears as though the two Jews lent money with interest.

Lending with Interest with a Non-Jewish Agent

1. A non-Jew who borrowed from a Jew and is ready to return the money, if he finds another Jew to borrow that money with interest can give it to him with interest. However, if the non-Jew brought the money to the lender Jew he can't lend it to another Jew since that considered a loan between the lender and the other Jew with interest. Obviously this is forbidden if the non-Jew actually gave the money back to the lender that the lender may not lend that money to a Jew with interest. Additionally it is forbidden if the non-Jew put the money on the ground for the other Jew to pick up and the lender stated that the non-Jew would be exempt once he placed the money on the ground. These are all considered Biblical interest. However, if the non-Jew simply hands the money to the borrower Jew in the presence of the lender Jew, most rishonim hold that this is rabbinically forbidden since the non-Jew is an agent of the borrower. However, there is a minority opinion in the rishonim who allows this. The halacha is not to accept this minority opinion.
2. It is forbidden for a Jew to arrange with a non-Jew to lend your money to him in order that he lend it to another Jew with interest. After the fact it is forbidden to take the interest since the non-Jewish agent is merely a ruse and it was really a loan with interest from a Jew.
3. If the lender didn't know about the fact that the borrower appointed the non-Jew to borrow for him from a Jew with interest he can keep the interest and some allow him to even collect the interest once it was arranged. Sephardim are more strict and only allow this completely after the fact that the interest was collected.
4. If a Jew told a non-Jew to borrow for him from another non-Jew with interest and he went and borrowed from a Jew with interest the borrower can even pay the interest.

Lending with Interest with a Non-Jewish Agent using a Security Deposit

1. Some permit borrowing from a non-Jew with a security deposit so that they can in turn borrow with interest from another Jew with that security deposit. This is permitted since the non-Jew takes responsibility for the original loan and it is treated as two loans and not one. Ashkenazim can rely on this opinion. Others hold that generally this is forbidden to arrange but if one explicitly tells the non-Jew that he has responsibility for the loan then it is permitted.
2. Even according to the strict opinion, a lender to a non-Jew with interest who collected a deposit from him which came originally from a Jew can collect the interest as long as he isn't certain that it was arranged improperly. Some say that he may not collect the interest if he knew that it was a Jewish security deposit such as if it is a Jewish article of clothing.
3. If the original Jew wants to get his security deposit back from the other Jew who lent to the non-Jew and the non-Jew isn't cooperating, the lender Jew doesn't need to work with the borrower Jew since they didn't have any transaction one to another.

Interest Gifted to A Jew or Non-Jew

1. It is forbidden to lend another Jew money in order that he give the interest to a non-Jew.
2. It is permitted for a Jew to borrow from a non-Jew even if afterwards the non-Jew gives the interest to a Jew.

Paying for the Fees and Other Losses of the Lender

1. It is forbidden for the borrower to pay for a loss than the lender incurred because the borrower didn't pay back on time. This includes a loss of profits and a loss if he had to take out an interest loan from a non-Jew. For example, if one Jew borrows another Jew's credit card and doesn't pay back on time if the credit card owner ends up paying the interest to the credit card company the borrower may not repay that interest to the lender.
2. It is permitted for the borrower to pay for the writing of the contract, even for a part investment which is also for the benefit of the lender, for the security of the loan, and for the fee of extracting the money from the bank if the lender wasn't also doing it for himself.
3. For example, if the lender is penalized by the bank for taking out his money early from an investment (such as a CD) in order to lend that money the borrower can pay for that fee. This applies specifically if he lost some of the capital or he already acquired interest and is now penalized, however, if he didn't yet acquire the interest the borrower may not pay for that loss.
4. A gamach which charges a fee for a loan in order to ensure the upkeep of the gamach is a question but some permit it, yet it is better to do so without stipulating that it be paid. Either way the fee shouldn't be dependent on the amount of the loan.
5. It is forbidden to pay the lender for his time and effort even if it meant he took off from work to arrange this.

Taking a Loan only to Benefit the Lender

1. If someone takes a loan only for the benefit of the lender it is permitted for the borrower to let the lender benefit from the borrower's property. For example, if someone doesn't need a house and does a favor to the poor contractor and instructs him to build it and he'll be paid for his expenses. Additionally the contractor can live in the house afterwards for free. That is considered permitted even though the lender is benefiting from the lender's property since it isn't considered a loan at all but a nice deed of the borrower.
2. Some poskim allow someone who wants to benefit a poor person or a talmid chacham to take a loan for him on interest. If that borrower makes money he needs to pay it entirely to the lender. Since he is doing it as a favor to the lender it isn't interest.

Annuity

1. It is forbidden to give a gift to someone on condition that they give you a small gift each year (or regularly) for an extended period of time such that the accumulation of the gifts is more than the original gift. Essentially an annuity using gifts is forbidden.

Payments from a Third Party to Create a Loan

1. It is permitted to give someone money in order that they lend money to someone else. That is only permitted on condition that the giver isn’t reimbursed by the borrower. Furthermore, the borrower can’t tell the lender that the giver is giving on his behalf.
2. Some poskim add that the borrower may not convince the giver to give a gift to the lender. There is what to rely upon to be lenient.
3. It is certainly forbidden to hire someone to get someone to lend you money and that hired agent pays the lender some of that money.

Gifts between the Borrower and a Guarantor

1. A borrower who accepts to pay his guarantor some amount of money each month or period of time it isn’t considered interest since it isn’t a payment from the borrower to the lender. This is permitted unless the lender set up the loan in order to get the borrower to pay the guarantor.

Payments from a Borrower to a Third Party

1. It is forbidden to ask a borrower to pay back anything in excess of the capital to someone else or a tzedaka. That is considered Biblical ribbit. If the third party already took the money the lender needs to return to the borrower the amount of that gift to the third party since he caused interest to be given.
2. It doesn’t matter if the lender initiated this stipulation or the borrower initiated the stipulation and the lender agreed to lend on that condition.

Payments to a Third Party to Create a Loan

1. It is permitted to pay a third party in order that he encourage someone to lend you money since the recipient of the payment isn’t the lender.
2. This third party could be anyone besides a close family member such as a financially dependant child of the lender.
3. It is forbidden for this recipient to give the money to the lender.

Gifts between the Guarantor and the Lender

1. If the guarantor or anyone else accepts to pay the lender some amount of money each month or some period of time as long as the borrower hasn’t paid that is considered interest.

Paying up a Loan of the Lender

1. It is rabbinically forbidden for the borrower to repay another loan of the lender if he does so besides returning the capital of the loan that he borrowed.

Non-Profits

1. Money that belongs to orphans who aren’t bar or bat mitzvahed can be lent with rabbinic interest but not Biblical interest. This is the practice.
2. The is permitted to collect the rabbinic interest even if it is collected after he is bar or bat mitzvahed as long as it was arranged beforehand.
3. If the orphan’s money was indeed lent with Biblical interest, if the borrower invested and in fact made as much as the percent interest that was demanded he needs to pay it. Some say that he only needs to pay it if he made twice as much as was demanded.
4. Money that is designated for talmud torah, poor people, or a shul can be lent with rabbinic interest.
5. Some say that it is permitted to lend money with rabbinic interest in order to have money to spend on a Shabbat meal or Suedat mitzvah.
6. This leniency does not apply to money designated for a tzedaka unless it was given to a charity and is in the domain of the charity.
7. Charity that is designated for an individual poor person can be lent with rabbinic interest.
8. Can you lend money with rabbinic interest to spend that money for a mitzvah? Some poskim hold that it is forbidden, while others hold it is permitted.
9. If a power of attorney or agent lent money of orphans with interest on their behalf and they already took that money the power of attorney or agent doesn’t need to pay it back and the orphans as well can keep it.

Ribbit for Pikuach Nefesh

1. It is permitted to borrow from a Jew with interest in order to save someone’s life. That is only if borrowing from a non-Jew with interest isn’t an option that would allow saving the person’s life. The lender is doing wrong by lending with interest but nonetheless one doesn’t need to worry about causing him to sin if one is trying to save someone’s life.

Taking a Loan from an Israeli Bank

1. It is permitted to take a loan from an Israeli bank account since there is a heter iska klali. It is preferable to write on the contract that it works with a heter iska.

Merchant Cash Advance

1. It is forbidden to be a broker for Merchant Cash Advance transactions since halacha deems them as a loan with interest. A heter iska can be used to solve the issue.

Links

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