Is It Permissible to Obtain a Loan with Interest?
Question: Asalaamu ‘alaykum, I am a civil servant, and there is a mandatory monthly deduction of 2.5% from my salary as a contribution to the “National Housing Fund” (NHF). It is expected that after 35 years of service or after retirement, a civil servant is to be paid back all the monthly NHF deductions plus 2% interest. My question is:
Is it permissible to get a loan from the NHF considering that you have to pay back with 6% interest on every installment since the deduction is compulsorily made?
Answer:
Wa ‘alaykum assalam wa rahmatullah wa barakatuh.
I pray you are well.
Borrowing Money From the NHF
No, such a loan from the NHF would be impermissible. Paying interest is impermissible. The Messenger of Allah (Allah bless him and grant him peace) cursed those who take an interest, those who give it, those who document the transaction, and those who act as witnesses to it. He said, ”They are all the same.” [Muslim]
Receiving the total at the end of the term may also be a problem, but that depends on the wording of the contract. I would get it checked to be on the safe side.
Please see:
https://seekersguidance.org/answers/hanafi-fiqh/according-hanafi-school-legal-reason-interest/
https://seekersguidance.org/answers/hanafi-fiqh/how-to-avoid-usury-a-reader/
https://seekersguidance.org/answers/hanafi-fiqh/can-work-firm-involved-interest-based-transactions/
May Allah facilitate matters for you.
[Shyakh] Abdul-Rahim
Checked and Approved by Shaykh Faraz Rabbani
Shaykh Abdul-Rahim Reasat began his studies in Arabic Grammar and Morphology in 2005. After graduating with a degree in English and History he moved to Damascus in 2007 where, for 18 months, he studied with many erudite scholars. In late 2008 he moved to Amman, Jordan, where he continued his studies for the next six years in Sacred Law (fiqh), legal theory (Usul al-fiqh), theology, hadith methodology, hadith commentary, and Logic. He was also given licenses of mastery in the science of Quranic recital and he was able to study an extensive curriculum of Quranic sciences, tafsir, Arabic grammar, and Arabic eloquence.
