Question:
Is it permissible for me to give out a loan to my best friend when I know that the purpose of him asking for a loan is not for his needs, rather he wants to boast when in reality he isn’t financially capable to pay his debt back on time? Hope for an explanation.
Answer:
Alhamdulillah, praise and gratitude to Allah SWT for His countless blessings for us all. Praise and salutations to our beloved Prophet Muhammad PBUH, his family, companions, and all those who follow his footsteps until the Final day.
A loan is a temporary handover of ownership to another person on the condition that the person will return it without any addition. [1]
In Arabic, it is stated as al-qardh (القَرضَ). Al-Qardh lexically means cut. According to the dictionary al-Misbah al-Munir [2]: ‘قَرَضْتُ الشَّيْءَ قَرْضًا’ means I’m cutting something. This noun means something given to another on loan. This word is used in Arabic for it (loan) cuts the owner’s right on the item.
According to the jurists, a loan is giving ownership of an item to another on the condition the person returns it without any addition. In Arabic, this process is named qardh, for this process results in the owner’s ownership being cut to be given to the debtor. This is in line with the literal meaning of qardh.
Allah SWT commanded the believers to record any loan or debt and its due date or deadline of payment. Allah SWT states in the Quran:
يَا أَيُّهَا الَّذِينَ آمَنُوا إِذَا تَدَايَنتُم بِدَيْنٍ إِلَىٰ أَجَلٍ مُّسَمًّى فَاكْتُبُوهُ ۚ وَلْيَكْتُب بَّيْنَكُمْ كَاتِبٌ بِالْعَدْلِ
“O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write [it] between you in justice.” [4]
Generally, debt in Islam is permissible and follows the syarak. A person in need is permissible and sunnah to ask from another without any guilty conscience. Furthermore, it is the responsibility of the person being asked. This is stated in Allah SWT’s book and scholars’ ijma’.
The wisdom for the sanctioning of this practice is clearly to realize Allah SWT’s wish to create an environment where people help one another for good intentions and taqwa amongst the Muslim ummah. Moreover, this practice can also strengthen the brotherhood relationship between Muslims by asking them to help those who are in need and suffering.
According to the book al-Fiqh al-Manhaji [6], the ruling of giving out a loan is sunnah while asking for a loan is permissible. This is the ruling regarding the loan in normal circumstances. Although, this ruling may change according to the intention of the debtor:
- Prohibited: If the creditor knows that the loan is going to be used for prohibited matters such as drinking wine, gambling and others.
- Makruh: If the creditor knows that the loan is going to be used for unbeneficial matters of to boast. Or the creditor knows that he isn’t able to pay it back.
- Obligatory: If the creditor knows that the debtor is in real need of the loan in order to continue his and his family’s lives and there is no other way for him to do so without the loan.
According to the above question as well as the arguments presented, we state the ruling of giving out a loan differ according to the situation and it is makruh to give out a loan if the creditor knows that it is for unbeneficial matter or just to boast when he actually isn’t financially capable. May Allah SWT grant us the correct understanding in this religion.
Wallahu a’lam.
[1] See al-Fiqh al-Manhaji, (6/82), Mughni al-Muhtaj, (2/117) and al-Taqrirat al-Sadidah, Qism al-Buyu’, (pg. 45)
[2] See al-Misbah al-Munir, 2/497
[3] See al-Fiqh al-Manhaji, 4/121-122
[5] See al-Fiqh al-Manhaji, 4/121-122
[6] See al-Fiqh al-Manhaji, 4/128-129