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Stipulating the payment of an extra money to the loan-The savings system


Stipulating the payment of an extra money to the loan

Q: What is the ruling on the following text of the contract:"I confirm my indebtedness to the Saudi Credit and Saving Bank of the social loan valued ..... I pledge to pay the sum in equal installments in the amount of .... as of ...., taking into consideration that I am committed to pay 10 KD as a penalty for late payment, in case I delay payment of one of the installments, and receive an official notice handed by a process server. Also, I am committed to pay 20 MD if the official notice is repeated. Moreover, (Part No. 11; Page No. 111) loan balance and penalties will be due if I delay payment of three successive monthly installments or breach the lending conditions according to the regulations of the bank." The question is: What is the ruling on the mentioned contract? What is the ruling on the one who is involved in it before knowing the ruling, and how can he be discharged? May Allah safeguard you.


A: Stipulating the payment of an extra money to the loan is regarded as absolute Riba (usury), according to the Prophet (peace be upon him), who said: Every loan followed by profit is Riba Scholars have unanimously agreed to this. If the debtor pays the amount late this does not mean he should pay extra money.May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family and Companions.


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