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.
| |
|
Latest Comments:
I've read many of the posts here and agree strongly that giving is a blessing. I am in need myself I know what it feels like to be turned down and no one will help you. No body seems to want to help if you have poor credit. I've been searching for a loan for months to fund my trip to Israel and my IRS debt. So many people slammed the door in my face. Although I am christian myself it seems like some of my christian friends are not as willing to give as they should. They also had strong opinions about my going to Israel by myself. I won't repeat those things said to me because some of them weren't too nice. I have to agree about the comment related to judgement. It does feel like these companies and friends are judging me. Only one person has that right to judge what we do in this world. I can only wish I will find a loan soon. I will keep looking and keep the spirit of giving in my heart. Thank you for letting me post my thoughts here.
|
Shalom,
Thank G-d you are well off, and fulfilled a mitzvah. A blessing
will be enabled when you most need it. Your loan is a worthy cause, are we not of one family?
Blessings
|
I gave an interest free loan to a friend nearly three years ago. She contacted me (after having lost touch for about 15 years) and told me she desperately needed $3,000 to keep her kids in the yeshiva school that they are in. She needed it immediately, but swore that she would pa it back, in installments, with post-dated checks over a period of about a year. I agreed to give her what she asked for, and sent the check immediately. In the past 3 years she has paid back only about $800 with numerous bounced checks (she keeps closing her bank accounts, then when I ask why the check bounced she'll give me a batch of new checks from a new account). I'm comfortably off, and won't starve if she doesn't pay me back, but I feel very angry and feel like a sucker. It has even caused problems between my husband and I - he didn't want me to lend her the money, but I told him that I wanted the mitzvah and he agreed. Now, although he doesn't say it, I know he's a bit angry about it. What can I do?
|
Shalom,
my situation is similar, and I fully agree with your comments. By Torah law we are commanded to help each other, we all hope for redemption every day, are we worthy? I made interest free loans when I was able, where are those of us that are presently able? Feasting on life's pleasures and tighter than the bark on a tree. Perhaps by the will of G-d, someone will stand up to the occasion.
|
Sadly people like myself that are in need have no idea where to go to get such help. The banks and everyone that is a reputable lender when one gets in trouble either want a huge interest rate or tell you that you have a debt to income ratio that is too high.
I am 66 and am doing the best I can to keep my head above water and The Lord WILL PROVIDE...that is not just a flip comment...He always has and always will. But in our secular society Senior citizens can't do much except hope for the best.
At one time when I was younger I had family I could turn to. Now my children are doing good to keep solvent. I lost nearly everything in the stockmarket crash.
I see things like loans that may endanger one's home and let's face it...if I were to lose my home I could end up in a room somewhere.
So while I understand the concept...it is very hard to find someone that will loan a person money for even a reasonable rate unless of course...they don't really need the money :-)
|
Shalom,
I have lent no interest money to numerous people, and, to the best of my memory, it's all been returned! I also give money, with no return desired.
Yes, there are some that are thieves, however Torah illustrates for us to help each other. There are honest people. Besides, the rewards come from G-d to the lender or giver, our history is rich in such scenarios.
Once bit, twice shy? No, we must go on, and abide by our mitzvahs. Trust in G-d, and do our best.
" All comes from G-d " Ezekiel
|
The Torah strictly forbids the collection or payment of usury on a loan granted from one Jew to another. However, there is a procedure, called heter iska ("partnership clause"), by which it is permitted to profit from funds extended to one's fellow. In a heter iska contract it is stipulated that the money is not a loan but an investment in a joint business venture, with profits to be shared between the owner of the capital and the one who has been granted the right to use it and deal with it.
State of Israel Bonds are sold with a Heter Iska, as above, and are therefore not considered to be interest. Rather, you are receiving returns on an investment.
|
How many of you readers have lost money giving interst free loans? I have. A substantial amount. Until you've walked the walk, don't talk the talk.
As for shaming a debter who doesn't pay -baloney! They look at you as if you are a sucker-and you are!
|
Thank you for your comments, but I am still unclear whether a State of Israel Bond is a form of charity. It feels like it is when I enable the growth of the country, but according to the definition here, it is not. I would like to correct you in one respect since you brought up the safety of the bond, since its inception in 1951 (through several wars and intifadas), the State of Israel has not defaulted on a single loan and is an "A" rated investment by S&P, Moody's and Fitch. I give to various medical and Jewish causes, too, and it feels good. Buying a bond doesn't feel as good, but I know Israel is in need, and as long as my family and friends and fellow Jews live there, it feels good to know I'm funding defense, hospitals, schools, infrastructure, etc.
|
Shalom,
Banks don't lend interest-free money. Ignoring a commandment is (G-d forbid) anyone's choice. Having poor credit is not necessarily an indication of being unworthy. Giving to charity is good, regardless of being tax deductible. Granting a no-interest loan is more personal, and the recipient receives 100% of it. To base judgement on a person's credit worthiness alone is indeed shallow.
What goes around, comes around. There may be a time when any of us need an interest-free loan, fortunes can change.
|
|
|  |
|
LOGIN
ASK THE RABBI
13 Comments
