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Borrowed money – Increased payments

Answered as per Hanafi Fiqh by Tafseer Raheemi

Question

If a person asks to borrow money and agrees to pay some extra money for every month they have not repaid the borrowed money yet the money to be paid for each month is not a fixed amount, does the same ruling as interest apply? Is this haraam?

Answer

Interest is when money is returned for money with some increase in repayment.  If this extra amount is mashroot (conditional) or ma’roof (a well-known habit amongst the community), then it will be classed as usury.  The scenario which you have put forward is the same, therefore it should be avoided. Wallahu aa’lam.

This answer was collected from Tafseer-Raheemi.com the official website of Sheikh Abdul Raheem Limbada (Hafizahullah) of UK.

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