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Taking Interest: Difference between revisions
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Lending money on interest is one of the more severe prohibitions in the torah. <ref> The Gemara BM 71a says that one who lends with interest becomes poor and never recovers. The Rambam Hilchot Malveh Viloveh 4:2 delineates six biblical prohibitions which could potentially be violated in any particular loan transaction. Ramban Sefer Hamitzvot Shoresh 6 adds a 7th. </ref> The lender, the borrower, the guarantor, the witnesses, and even the scribe violate when engaging in an interest-bearing loan. <ref> Mishna Bava Metzia 75b. S"A YD 160:1</ref> | Lending money on interest is one of the more severe prohibitions in the torah. <ref> The Gemara BM 71a says that one who lends with interest becomes poor and never recovers. The Rambam Hilchot Malveh Viloveh 4:2 delineates six biblical prohibitions which could potentially be violated in any particular loan transaction. Ramban Sefer Hamitzvot Shoresh 6 adds a 7th. </ref> The lender, the borrower, the guarantor, the witnesses, and even the scribe violate when engaging in an interest-bearing loan. <ref> Mishna Bava Metzia 75b. S"A YD 160:1</ref> | ||
==Basics== | ==Basics== | ||
# Rabbi Yosef Haim presents the general rule that no extra money can be collected in return for lending. <ref> BI"H, Vaetchanan, 6 </ref> | |||
# 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, The gemara BM 63b explains that as long as one is paying extra to be able to hold the money for longer, it would be a violation of this prohibition. </ref> | # 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, The gemara BM 63b explains that as long as one is paying extra to be able to hold the money for longer, it would be a violation of this prohibition. </ref> | ||
# It is prohibited to lend with interest even if the borrower is wealthy and willingly agrees to pay the interest. <ref> Shulchan Aruch YD 160:1,4. </ref> 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. <ref> Iggerot Moshe YD 3:93 </ref> | # It is prohibited to lend with interest even if the borrower is wealthy and willingly agrees to pay the interest. <ref> Shulchan Aruch YD 160:1,4. </ref> 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. <ref> Iggerot Moshe YD 3:93 </ref> | ||
# 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> | # 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> | ||
==Rabbinic Prohibition of Interest== | ==Rabbinic Prohibition of Interest== | ||
# 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. <ref> Shulchan Aruch and Rama YD 160:18 </ref> Additionally, one who receives biblical interest must return it but this does not apply to certain cases of rabbinic interest. <ref> Shulchan Aruch YD 161:2 </ref> | # 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. <ref> Shulchan Aruch and Rama YD 160:18 </ref> Additionally, one who receives biblical interest must return it but this does not apply to certain cases of rabbinic interest. <ref> Shulchan Aruch YD 161:2 </ref> | ||
