Is it permissible to take out a university loan with a 4% increase that is paid to the bank as fees, knowing that the value of the loan will decrease in the future compared to the repayment value?
There is no objection to increasing the loan amount if it represents actual service fees. However, if it is usurious interest, it is not permissible except in cases of recognized necessity. Naming interest as "service fees" holds no value if it is not truly so. Therefore, it is essential to verify that administrative fees are actual fees and not a ploy to impose usurious interest, for in contracts, what matters are the meanings, not the words. Many scholars have prohibited fees from being a percentage tied to the amount, lest it become a stratagem for usury.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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