The Official Website of the Office of His Eminence Al-Sayyid Ali Al-Husseini Al-Sistani

Question & Answer » Loan

1 Question: Can I a take bank loan knowing that the bank will charge interest?
Answer: Taking an interest based loan is not permissible except for when it is very urgent; it is necessary that he should do so with the intention that it is a transaction without return, even if he knows that he will end up paying the capital as well as the interest. And he should not do so with the intention of getting the loan with the condition of paying interest.
2 Question: What is the [minimum] limit of the difficulty (al-haraj) that lifts the prohibition? Is exorbitant price [for a halãl item] that could still be bought with [financial] strain or by getting a loan a [valid] example that would make a harãm [but cheap alternative] item permissible religiously?
Answer: The circumstances are different in this [case], and the criterion is the extreme hardship that is not normally tolerable.
3 Question: Some trading and manufacturing companies get loans from private or state banks in Muslim countries and also from other [non-Muslim] institutions with the condition of interest; and they also earn interest on the deposits they leave in those banks. Are we allowed to buy shares from these companies or be partners in their ventures?
Answer: If the partnership with them is like participating in their interest-bearing activities, it is not allowed. However, if Muslims own the company and it receives interest from the banks of non-Muslims, there is no problem [in buying its shares or partnership] from this perspective.
4 Question: Banks in the West give loans —known as mortgage— to those who do not have enough money to buy houses; this is to be paid back in [weekly or monthly] instalments with a high rate of interest. Is a Muslim allowed to use this facility? If it is not permissible, is there a solution in your view for someone who claims that he needs the mortgage to buy his own residential house and does not possess enough money to pay for it?
Answer: It is permissible to take the money from the bank that is financed by non-Muslim government or private funds but not with the intention of loan. The knowledge that the bank will sooner or later force him to pay the capital as well as the interest does not affect [the lawfulness of] his taking the money.
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