These three cases provide examples of riba, or usury, which is prohibited in Islam. [1] Case 1 describes how charging additional interest on a loan is riba and oppressive to the needy. [2] Case 2 explains that paying installments on a purchase with interest charged results in paying extra, which is considered riba. [3] Case 3 states that exchanging unequal amounts or qualities of goods on the spot is a form of riba al-fadl.
These three cases provide examples of riba, or usury, which is prohibited in Islam. [1] Case 1 describes how charging additional interest on a loan is riba and oppressive to the needy. [2] Case 2 explains that paying installments on a purchase with interest charged results in paying extra, which is considered riba. [3] Case 3 states that exchanging unequal amounts or qualities of goods on the spot is a form of riba al-fadl.
These three cases provide examples of riba, or usury, which is prohibited in Islam. [1] Case 1 describes how charging additional interest on a loan is riba and oppressive to the needy. [2] Case 2 explains that paying installments on a purchase with interest charged results in paying extra, which is considered riba. [3] Case 3 states that exchanging unequal amounts or qualities of goods on the spot is a form of riba al-fadl.
Riba is referred to as an excess on the principal amount
given for a loan (i.e.interest)
Mary was urgently needed to borrow RM1000 from Adam.
After a week, she paid back the RM1000 to Adam. If Adam asks her to return an additional amount, say RM 100 for helping her by merely lending her the money, that RM100 is clearly riba. This is not allowed and prohibited in Islam because it is considered as an oppression to the needy. At the same time, Adam would have received the money without working or using his own effort.
CASE 2 The longer the period offered in installment payment, the more the amount payables clearly represent riba.
A set of electrical appliances can be purchased at
RM800.00 on cash terms. However, if you pay through an installment scheme, you end up paying something like RM15.00 per week for 18 months. The total payment would amount to RM1080.00. Thus, you have to pay an extra RM280 if you choose to pay in an 18-month period. This shows that an advance or additional sum (in addition to the original price), called interest charge, is calculated based on the repayment period payable. It is based on a fixed interest rate according to the repayment period. The interest charged in this scheme is considered riba. CASE 3:
The sale of unequal goods is clearly involved riba.
If one dirham of dates of high quality, are exchanged on the
spot with two dirhams of poor quality dates, then this is riba al-fadl and is prohibited. Similarly, if 50 grams of gold jewellery with intricate work requiring hours of labor is exchanged on the spot for 40 grams of simple gold, then this is riba al-fadl.