Is a bank loan taken to finance a project, with an interest rate of 24% over five years, considered usury (riba) compared to purchasing equipment in installments with a 2% monthly interest rate? If it is usury, what is its expiation, and why is there insufficient awareness regarding this matter?
Whoever borrows money intending to return it with an increase has fallen into forbidden usury, and must repent sincerely. It is permissible for him to utilize the money for lawful purposes. However, purchasing a commodity on credit at a price higher than its immediate cash price is permissible. The difference between the two is that the first is a usurious loan, and the second is a lawful sale, according to the Almighty's saying: "And Allah has permitted trade and forbidden usury." A Muslim must not embark on a transaction about which he doubts its permissibility until after consulting trustworthy scholars, as the Almighty says: "So ask the people of the Reminder if you do not know." Likewise, scholars must teach people the rulings of their religion.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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