What is the ruling on a personal loan from which the lending party deducts a percentage (1.5%) to be placed in a non-refundable fund, and the remainder of the repayment is waived in the event of death, knowing that this is a prerequisite for obtaining the loan?
Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 2026
The purpose of a loan is to assist and meet the need of the borrower. If the lender stipulates a benefit or an increase, it ceases to be a loan and instead becomes usury (riba), which is forbidden by scholarly consensus. Deducting 1.5% from each borrower is considered an increase without an equivalent exchange. The fact that the organization waives the remaining loan balance upon death does not change the condition from being usury. The borrower's acceptance of this increase, hoping for exemption from the remaining balance, is a form of gambling.
Summarized from the full answer at Ftawy · imported
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