Riba In Secured Loans For Consumables
Is it the “hardship” that makes it sin or “unfairness and Zulm”. I am trying to understand the Zulm factor in “having to recreate” as we recreate all the time to fulfill our obligations. Lets suppose “having to recreate” is what makes Riba a sin, so in my original question, the borrower wouldn’t have to recreate anything as he’s got the loan against a usable asset which he can sell off or pay in settlement of his obligation. So what makes it a riba transaction for the lender? The example below explains my question better: Lets say “A” asks “B” to lend money for his wedding at 10% markup against his car as collateral for one year. B is reluctant to do so as it involves Riba (as you have explained above). “A” offers an alternative; he sells his car to “B” for the loan amount and buys it back at 10% higher value payable in one year time. Since the substance of both transactions is the same, wondering how can one is causing “hardship” and other is ok?
@faisalharoon Please revert when possible.
It’s highly encouraged to give out surplus money if a need of the society presents itself. Even if someone is not willing to part with that money, they can keep it to themselves- it can’t be lent on riba. Secondly, you keep mixing personal loan transactions with business transactions; please understand that rules are different for the two. For details you can watch the videos in the following thread: Discussion 30863
My questions or concerns are three fold: The right of society on the wealth surplus to own needs is on both consumable and usable. Chapter 107 endorses this point even more. In addition, how one spends his surplus money is not defined. If one chooses not to lend but invest in his business to create jobs and supply useful products is no sin on him. Hoe does it make sense to link to prohibition of riba (eating others money unjustly) on loans for consumables only ? Bear in mind the Quran n Hadith has have explained Riba differently and there is no differentiation between consumable and usable. This interpretation is added by the scholars. Riba is not just sood. Any transaction that has unequal exchange causes riba to the extent of the difference. One can clearly see how it is like eating others money unjustly. Unless we understand the definition correctly we can not understand the difference between riba and trade or rent. Trade or rent is a value fo value exchange so no question of riba. Loan with interest has unequal exchange so it begets riba. Thats the high level stuff. Some explanations: Profit in trade is not riba as it is the cost of service that is added to the product such as transportation, storage, investment etc. Rent is a cost of usage. Value of goods or services exchanged is measured against fair market price. If the above is clear we can discuss how we can apply to different scenarios.
I consider Riba as undue profit; especially if earned by taking undue advantage of a calamity, natural disaster and involving necessaties of life. You can call profit as service cost, risk taking cost or opportunity cost, but at the end of the day, it is something above the cost of equipment rented.