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Interest-Free Loans

Interest-Free Loans

The greatest form of charity


Granting an interest-free loan is not just nice, it’s a mitzvah (Exodus 22:24). For how much? As much as the borrower needs, as much as you can afford. If he needs and asks, and you turn him down, his cries are heard on high—and that’s dangerous stuff. On the other hand, give him that loan and “you shall call and G‑d will answer; you shall cry and He will say, ‘Here I am’” (Isaiah 58:9).

Lending money interest-free is the highest form of tzedakah (charity), far greater than giving free handouts. A handout may preserve a life for a day, but a loan preserves that sense of self-sufficiency necessary to get back on your feet. That’s why every Jewish community is expected to support at least one interest-free loan society.

Unlike tzedakah, free loans are for both the poor and the richWhat if someone is not needy, but would like a loan to make more money? Perhaps not as great, but still a mitzvah. Unlike tzedakah, free loans are for both the poor and the rich.

Some important details:

  • Don’t grant the loan if you believe that the money will be squandered and the borrower won’t have the means to repay.
  • It is expressly forbidden for two Jews to transact a loan that involves any form of interest whatsoever. If the loan is for business purposes, a halachic contract can be drawn up that makes the lender a partner in the business, thus entitling him to some of the profits. Speak to a rabbi to facilitate this procedure.
  • Don’t press a debtor if you know that he is unable to repay the debt. Don’t even appear before him, even without making any demands, lest he be frightened or shamed.
  • On Sabbatical years, all loans are voided. Click here to learn how to avoid being voided.
  • No loan should be made without either witnesses or a written contract.
Illustrations by Yehuda Lang. To view more artwork by this artist, click here.
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Miriam Melbourne June 10, 2017

if someone has the money, but is avoiding paying you back, are you allowed to outright ask them for it? Reply

Rabbi Yossi Grossbaum, for Folsom, CA July 5, 2017
in response to Miriam :

If the purpose is to collect the funds, not just to harass them - and they have the money - then you can certainly approach them outright. Reply

Aida Orlando October 1, 2016

Job search I don't want to get a loan. I need prayers in finding a job. Reply

Anonymous montreal April 23, 2017
in response to Aida:

well said. !!! Reply

Nancy Atlanta February 5, 2016

What a wonderful practice. Why can't the rest of the world do it this way?
Thank you for this reading. Reply

Maurice M Mizrahi BURKE May 22, 2015

What about inflation? What about inflation? If you lend $1,000, and when you get it back it costs $1200 to buy the same things you could buy for $1000 when the loan was made, are you allowed to charge $1200 and still call it an interest-free loan? Reply

Anonymous Camarillo, CA, USA July 5, 2017
in response to Maurice M Mizrahi:

No, but you can accomplish the same thing without using money. You say I'll buy you such-and-such now, and you buy me such-and-such in the future. Of course, you risk that the price of whatever the person is supposed to buy you might not rise as fast as inflation. Reply

Anonymous ca September 8, 2014

Interest free It is so hard to find someone willing to donate that much money interest free! Right now my mother is in desperate need of help to pay for medical treatment. Me and my sister have been going from bank to bank seeing how much they will charge for interest.

I'm praying and hoping for a miracle here! Reply

Catherine nyny May 8, 2014

money lender My great grandmother was an interest free loan lender. She was a seamstress who came from Sicily and who was a Russo and was a hidden jew from the Spanish inquisition days. Apparently she knew about this mitzvah. Our family always spoke about her good nature and generosity. Reply

Anonymous Ontario Canada February 13, 2014

interest free loan to Pauline N. Nowroth Pauline N. Nawroth
If I understand correctly , you just bought companionship,
As for the others on this site when we do encounter legitimate desperate ones what would you do? Do you think about to help or not ? How far would you go helping with money, lets say you do have money to do so ?
Question to Chabad why to expose people problems here ? It is one think to talk about loans , free interest on this site . Chabad do you ever think that people may know here each other .... just from reading the postings , regardless it is a anonymous. Reply

Pauline N. Nawroth a February 10, 2014

.....Giving a Loan It has finally dawned on me.....I will not worry about the monies I have put out for a gentleman I care for. Now I know your next question and my answer is: I wanted and needed his companionship and I got it. Also, if I did not have the funds I gave him, I would have never given it nor would I have had his companionship. It is not easy to admit one has made a mistake, but I am willing to live with it in hopes of a small but satisfactory ending will come about. Now it is a verbal promise and time alone will tell. You see, I have patience and am willing to wait it out. Reply

Ezra SanDiego February 9, 2014

transfer your credit card debt The idea of a free loan isn't so you can transfer your credit card debt to an interest free source. It is to help people who have dire need for survival. -WRONG.
An interest free loan is for anyone who agrees to pay it back as per the rules at the top of the page.
And....the law of the Shemitah still applies.
Blessed are those who give and follow the word of HaShem. The promise to be blessed is written in the Torah. It is beyond spreadsheets.

You have to trust in HaShem, follow his ways.
Test it for yourself. Reply

Anonymous NY January 28, 2014

I recently got married and had no money to pay for the essentials, my wife had no money as she is a young girl from a poor household and most of the wedding expenses fell on my shoulders. With faith in God that everything will be okay we scheduled our wedding date and got married. On the day of my wedding I ran around without a head worrying how I am going to pay for the wedding, that feeling of helplessness and loneliness will never be forgotten, what should be the most beautiful day of my life was for me the most worrisome day and night of my life, my smile was not real and my cries under the chupa most definitely was. I tried calling gemachs but was unable to get what I needed. At this point I am in my first year of marriage and I am still struggling with paying off the costs of my wedding, the constant worries and sleepless nights of financial stress is truly getting to me and definitely not helping in the harmony of my marriage. If anyone knows of a gemach that could help me out and take my stress away I would really appreciate if you could lead me in the right direction.
Thanks Reply

Kurt San Diego, CA January 19, 2014

Interest free loan to charity of your choice. The idea of an interest free loan is to pay off high-interest credit card debt. It's to pay off anything or buy anything. Jews should not pay interest.
I invite anyone to join me in creating a charity loan setup in association with your Synagogue or charity.
The money would be made available as per rules listed in Chabad, to members of your Synagogue.
Payment plan goes to the Synagogue or charity.
The idea is the lender is giving to charity, let the money reside in a borrower first, then the borrower pays the charity.
Lender obtains the mitzvah, borrower enjoys benefits from HaShem.
Charity gets a donation. Everyone wins. Tikum Olam.
Wisdom of the Torah. Reply

Linda Bridgeville January 9, 2014

What good is it? I just tried this. I only needed the money for a month. I'm pretty desperate and they said I needed a co-signer. If I had a co-signer, I could get a loan from a bank. Why would I go to them? I don't have a co-signer. Reply

Anonymous C June 2, 2013

Tax implications In the U.S., a lender who does not charge interest is required to pay tax on the "fair market" interest that the lender could have charged (according to secular law). Since the prohibition against interest is intended to prevent the lender from making a profit, and is not intended to cause the lender a loss, is it acceptable to charge interest equal to the amount that the lender will have to pay in taxes because of the loan, so that the lender breaks even and neither gains nor loses money? Reply

Anonymous canada February 5, 2013

To Cris R. This is a sad situation for a parent . Reply

Cris R St. Louis, MO February 3, 2013

Not ours? I found I was in a hurting position about a year ago; I was living with my oldest son, and although it was I who was responsible for all the bill payments, had found I could not make them for one month. I told my youngest son, in passing conversation, about my situation. He offered to "loan" me the money; I said no, as I had no way to pay it back. My oldest son, knowing the bills I was paying supported him as well, said that HE could pay it back. I asked my youngest son if it was acceptable to him that he loan me the money with the understanding that my oldest son pay it back. He agreed.

So, when the time came to re-pay the loan, my oldest son did not have the money, and my youngest son held ME accountable for the loan. He said that it did not matter that my oldest didn't have the money, he had loaned ME the money, hence I was responsible for the repayment. I was very hurt by this; and vowed to never do it again. Reply

Betsy Long Beach, CA September 1, 2012

interest-free loans Friends borrowed a significant sum to keep themselves current on their mortgage. My husband said it was dangerous to lend to friends and that I should do so only on the condition that we and our friends not speak aboit it until and unless they were able to pay it off. It took a number of years for them to be able to return the money. I continued seeing my friends on visits home and talking to them long distance but we both kept to refrain from mentioning the loan. I am convinced that my friends benefitted from that amount of money more than we would have from the interest over the years. Banks are black and white about money. It takes a human to handle it with heart. Reply

Michael bradenton, florida May 24, 2012

Dear Brian The idea of a free loan isn't so you can transfer your credit card debt to an interest free source. It is to help people who have dire need for survival. Buying a car in order to become employed when unemployed and unable to afford such an expense would be a Great reason to get a free loan. Reply

Michael bradenton, florida May 24, 2012

Dear Sarah I stand corrected. Reply

Sarah Yarbrough Canton, GA May 22, 2012

dear Michael... If you read all of the comments...I am not the one that referred to tax deduction, it was someone else. My point is that if I AM looking for a tax deduction...then I may give to strangers...and then not have the money to help family and friends...I do not believe in charity which as you point out is not truly a Jewish is a blessing and for us to help our friends and family if they are in need...but for loaning you are supposed to forgive debts every seventh year. The book of Ruth is very clear on the gleaming of the fields for the poor, but notice it is a local thing and Boaz told the reapers to leave extra in fact so he knew exactly who he was helping. Lev. 25. It gives a rather accurate outline of giving and loaning...if one is in NEED and friend of family then one should widows and orphans also. However it is the obligation first of the locals and family of the poor. Hopefully it is as a blessing and a giving heart and NOT just an obligation. Attitude. Reply

brian rosenberg ventnor city, nj via May 20, 2012

obtaining a free of interest loan I'm interested in getting a loan so I can free up money I have in credit card debt fofood money and to buy clothes and a car.I heard of a free loan society in the philia pa area but don't know how to contact them.I'm also traveling to ventnor nj a lot so if anybody knowsb of the same there it would be apreciated if I could get the info to contact them. Reply

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