Interest-Free Loans - The greatest form of charity

The greatest form of charity

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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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February 5, 2013

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

Anonymous
canada

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.

Cris R
St. Louis, MO

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.

Betsy
Long Beach, CA

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.

Michael
bradenton, florida

May 24, 2012

Dear Sarah

I stand corrected.

Michael
bradenton, florida

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 concept...it 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 help...as 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.

Sarah Yarbrough
Canton, GA

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.

brian rosenberg
ventnor city, nj
chabadac.com

May 18, 2012

On lending and loans...follow the Torah

One's first obligation is to see that family NEEDS are met. it isn't acceptable not to provide the necessities for one's children.
Second is one's debts...what one does reflects on all Jews. We must be honorable.
A woman who has her own money is may spend it as she wishes...but if it is her and her husband's money she may not spend it without agreement...as he also should not.

I have lived my entire life by a little book of advice. I am sure there are many books on advice to home mgt. and budgeting at the synagogue. Rather than follow ones own "advice" sometimes it is a good idea to have a guide. In my old age it has answered a LOT OF QUESTIONS that were in truth very simple...my own emotions and desires might not have followed the Torah. I can't tell you over a lifetime how much money I HAVE LOST but if it was someone that didn't pay me back...THE LORD always made it up!

Sarah Yarbrough
Canton, GA

May 18, 2012

Dear Sarah

Tax deduction should never be the reason to reach out and help someone. Also as Jews we do not believe in charity. The word charity comes from the Latin word caratis, which means from the heart.We don't help others because it makes us feel good. We help because it is a mitzvot or commandment to do so. We view this as tzdekah, or righteousness. It is how Hashem in his wisdom and love wants for us all to act. The Rebbe spoke of this often as have other wise men of all the ages. The commandment to leave the corners of our fields for the poor, widows and orphans teaches us to give part of everything we produce to others in such a way that those less fortunate than ourselves may be blessed by the prosperity that Hashem rains upon us his people. I firmly believe that everything we endure and everything that occurs is for a reason. Be strong and patient Ms Sarah. Keep working hard and do your best. I sincerely hope what you need is coming to you soon. Shabbat Shalom

Michael
Bradenton, Fl

May 17, 2012

Jewish Business

I recently told my husand how much I admired and trusted Jewish business. Subsequenty he lets me give our product when I feel it is right to do so (fr instance a stranded couple (preggies, too) told us how bad they felt living with friends when their house was not ready, so I gave them as much of our product as I could. I come from Toronto, and there is great kindness between Torontonians as a rule, and even more generosity from the Jewish business crowd. The quality of this mitzvah confirms my belief (I needed to read this!)
I wish the fortune I should have made were in my hands, because I believe in this kind of lovin' fairness.

sue
Kanata, ON

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