Lending Money/ Giving A Loan

[gajarkahalva]

Salaam,

I have a question regarding giving a loan or lending money to friends, relatives etc.

I have heard that when we give money to anyone as a loan, it should be accompanied by a contract/agreement which details the amount given and the date by which the money must be returned to the lender.

Now, when lending money to relatives or friends and also giving them a contract as an agreement may not go down too well - but is this the way that Islam prescribes to go about this process? Or should it be a more informal arrangement?

If anyone has any hadith from the Holy Prophet saww or the Imams a.s on this i will appreciate it very much. Also any guidance on to what is recommended will also be helpful and any links to some reading material.

Jazakallah

[Ali-Reza]

A hadith or two from infallibles (as) may not help you I recommend you ask this from your marja or your local sheikh who follows the same marja you do.

I personally would get it in writing when it comes to big amount of money or at least involve a couple of witnesses when it comes to relatives.

Now immediate family members, I don't know. I have good relationship with mine (alhamdulliah) we spot each other all the time.

Edited April 18, 2013 by Ali-Reza

[Abu Hadi]

The longest ayat in the Quran is about contracts and agreements and writing them down. So definitely, you should write it down.

[Rorschach]

Salaam,

I have a question regarding giving a loan or lending money to friends, relatives etc.

I have heard that when we give money to anyone as a loan, it should be accompanied by a contract/agreement which details the amount given and the date by which the money must be returned to the lender.

Now, when lending money to relatives or friends and also giving them a contract as an agreement may not go down too well - but is this the way that Islam prescribes to go about this process? Or should it be a more informal arrangement?

If anyone has any hadith from the Holy Prophet saww or the Imams a.s on this i will appreciate it very much. Also any guidance on to what is recommended will also be helpful and any links to some reading material.

Jazakallah

Well, it is an informal agreement. Whether or not you set a contract depends on the seriousness of amount and trustworthiness of the borrowers. Also to take into account your fiscal circumstances.

[xstatik2]

It is a good gesture to "help" a brother / sister in need of finance. But you must remember that the intention behind the consideration is to help make self sufficient the beneficiary (this is recommended especially in the case of orphans and widowers) and charging interest on such loans is a big sin.

Contracts have and will always be a part of Islamic History as it is always advisable to conduct business with one another under contracts. They have been done before in the time of the Prophet (P.B.U.H) and there's no reason why it should be discontinued.

[Abdullah1400]

Salaamun Alaykum,

In terms of the Sharia it is not wajib to put it in writing, it is mustahab to do so.

Apart from that I would say just use your common sense.

[gajarkahalva]

I have read 2:282 and it basically says that it should be put in writing. So that is what i will do if ever i need to give a loan.

However, the ayat also says that the debtor should be the one who sets the terms. So say for instance i lend someone £100, and they say they will pay it back in 8 years - can i say that that is unreasonable, how about 10 months? and then basically come to a mutual agreement on the time?

I think i will contact seestanis rep in London to confirm this.