Taking a loan from a bank.
Q. With the cost of goods and services increasing ever so rapidly, it’s very unlikely that most people would have enough money in cash to purchase expensive items such as a car, house and land, etc. They are required to take a loan. When taking loans at banks here in Trinidad, customers are required to pay interest in addition to the money they borrow. What is the Islamic view on this?
A. The act of receiving interest and paying are both totally haram in Islam. As such, it would be totally impermissible for one to enter into a transaction which requires him to pay interest (like taking a loan). Although the prices of everything has gone up and continues to increase, I do not think that anyone would be in a position where he/she would be forced to do an interest bearing transaction in order to survive. What is seen is that people, in order to live a luxurious and pleasurable life, get involved in such transactions. There are also others who get into them in order to expand their business and make more money. However, you may rarely find Muslims who will be forced to enter such transactions in order to fulfill their basic needs and necessities of life and living. If they reach such situations, then they would first of all, be required to search for avenues where they would not be required to pay the interest (for example taking a loan from other Muslims). If they are not able to do so, then as a final resort, when there is a valid and urgent need, they would be allowed to enter such transactions, where they are forced to pay interest. Even at this time, the transaction remains Haram, however they would be excused based on a dire need. When the necessity has been fulfilled, they would not be able to continue taking loans and paying interest upon them in future. It is therefore extremely important that Muslims identify between their necessities and comfort, before getting involved in those Haram transactions where they are required to pay interest.
And Allah knows best.
Mufti Waseem Khan