It's a Mitzva to lend money to a fellow Jew. Included in the Mitzva is providing moral support and giving sage advice. Even lending money to wealthy people - if they are short of cash - is a Mitzva. One should not lend money without witnesses, unless the borrower provides collateral. Even better is to have the lender sign an IOU - a promissory note. One may not demand collateral after the loan has been given to the borrower, except in a Bet Din (Jewish Court). One may not use the collateral, as that would be a form of interest. One may rent out the collateral and deduct the rental from the loan, under certain circumstances. Source: Kitzur Shulchan Aruch 179:1-3, 7-8. - Danny Please daven for a little girl - TAMAR bat NAAMA - תמר בת נעמה - who is undergoing chemotherapy
Tuesday, June 24, 2008
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Are you allowed to charge interest? If it is a cash loan?
ReplyDeleteThe Torah prohibits charging interest on loans to fellow Jews. Any loan; cash or goods; even asking a favour in return is prohibited.
ReplyDeleteThe Torah allows one to charge interest on loans to non-Jews.
The Torah allows one to do business deals with fellow Jews - and if the loan is given as a business venture then one can make a profit - but these halachos are very complicated and I haven't had time to write them up clearly yet.
Thanks for your response
ReplyDeleteWhat if a jew owned a bank could he lend to a another jew?
Here in Israel there are many Jewish owned banks - and they all do business with Jews.
ReplyDeleteThey use a Heter Iska - a document transforming all loans into business ventures; something that only a major Torah Authority can author.
That said, there are people here who make sure not to go into overdraft so as not to have to pay the banks any interest, since they don't want to rely on a "legal loophole".