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Paying off Interest on a Loan with Interest from a Bank Account

Answered according to Hanafi Fiqh by Daruliftaa.com

Is it permissible to pay off interest on a loan with interest from a bank account?

ANSWER

In the name of Allah, Most Compassionate, Most Merciful,

Taking a loan on interest from the bank is decisively prohibited; hence it will not be permitted to take a loan on interest even with the intention of paying the interest back with interest received in another account. In fact, one will be guilty of two sins, the sin of taking interest and the sin of giving interest.

However, if one had previously taken out a loan on interest and has now sincerely repented on this sinful act, it will be permitted to pay off the interest with interest money acquired through another account, provided two conditions are met:

1) The interest taken and given is at the same place. It will not be permitted to pay off interest on a loan taken from one bank by giving interest money received from another bank. Hence, it will only be permitted to pay off the interest amount with interest money if the interest received and paid are both at the same bank.

2) The amount taken should not be more than the amount given. Anything extra must be disposed of by giving it away in charity.

Finally, one should make sincere repentance for taking out a loan on interest and avoid being in this position in the future.

And Allah knows best

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

This answer was collected from Daruliftaa.com, which is headed by Mufti Muhammad ibn Adam Al-Kawthari. He’s based in the United Kingdom.

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