Riba In Secured Loans For Consumables
Hardship of having to recreate is just simple math. Let’s say that you borrow $100,000 . Out of this you lose (or use up) 80% , leaving you with $20,000 . Now in order to recover your loss, you don’t just have to earn 80% back, but you have to earn 500% back. If you add the additional burden of riba on top of this, it might create a situation where you will be never be able to repay your loan back. Following are answers to your points: 1. Yes. 2. Car is not a consumable item. However, in case of a consumable item, you can repay from any source. Also any restriction of riba is for the lender, not the borrower. 3. Hopefully the above passage answers this. 4. Again, car is not a consumable item so this is not a valid concern.
You have to understand this in the context that the Quran has first of all established the right of the society in one’s additional wealth. Then it has prohibited unjustly consuming the wealth of others. Riba is just one application of these principles. Hardship in recreation of wealth in loan transactions is one of the justifications provided by scholars for the prohibition of riba. As I have explained to you before, in a loan transaction it’s very intelligible and makes sense if we apply the math. However, if one is not satisfied with this justification, then they can look for a better one – it doesn’t make any difference.
I am not understanding the need to receive a fixed payment if it is less than the fair share of the investor profit and if in case of no profit the investor receives no payment; why not in this case go for a fixed share of profits. Why fix payment and not a fixed share of profit? In stocks, if a company goes bust, the sales of assets first pay for secured loans and other obligations and only at the end whatever is left over is paid to the stock holders; in most cases they get very little or nothing. (Here I am talking about common stocks)