Culled from Minhaaj al-Muslim by Shaykh Abu Bakr Jabir Al-jaza’iry:
As a continuation of our series on loans and lending, the following are different types of loans and the shariah rulings regarding them:
GRATUITOUS LOAN
A gratuitous loan refers to a thing given out by a person (lender) to another (borrower) for his benefit and usage for definite period after which it is returned to him. For example; a Muslim borrows a pen for writing then he returns it to the owner after using it.
Its Ruling
Giving a gratuitous loan is permissible and may become a recommended or obligatory act upon a Muslim if his believing brother is compelled to borrow something from him while he himself is in no real need of it for certain. Allaah says:
"Help you one another in AI-Birr (righteousness) and At-Taqwa (piety) .,." (Q5[Maida]:2).
In addition, you should encourage small kindness and be saved from the woes promised to those who do not.
"So woe unto ... those who do good deeds only to be seen (of men). And prevent AI-Ma'un (small kindness)". (Q107[Maun}:6·7).
For every possessor of wealth, there is a due from him. The Prophet (salallahu alayhi wa sallam) said:
There is no owner of camels, cows or sheep, who does not give their due except that he will be made to sit at a spot of flat land for them on the Day of Resurrection. Then the ones with cloven hooves will trample him, and those with horns will butt him. There will be no lean ones or ones with broken hams among them. We said; "0 Messenger of Allaah! What is t1ieir due?" He replied: "Lending their males for studding, loaning out their buckets, lending them for usage, allowing them to be milked while they drink water and allowing them to be used in the way of Allaah ." (Bukhari)
Regulations
Lawful things: Only lawful things may be given as gratuitous loans. The principle being the statement of Allaah:
"...do not help one another in al-lthm (sin) and al- Udwan (transgression) " (Q5[Maida]:2)
Hence, it is not permissible to lend your car to carry alcohol or for robbery operation; or lending your money to someone who would use it to indulge in illegal trade.
A Muslim should not be made a gratuitous loan for a non-Muslim: Allaah says:
"...And never will Allaah grant to the disbelievers a way (to triumph) over the believers." (Q4: 141).
Guarantee
A guarantee is a firm promise that you will do something or that something will happen if a promise is not fulfilled. The' lender can stipulate certain conditions for his gratuitous loan and the borrower is responsible as agreed, if it is damaged. The Prophet (salallahu alayhi wa sallam) said:
"Muslims are bound to their contractual conditions. " (Abu Dawood).
Having a guarantee is preferable than not having one as it saves from excessiveness, negligence and confers a sense of responsibility on the borrower. The Messenger of Allaah (salallahu alayhi wa sallam) said: "
The hand which takes is responsible till it renders back" (Abu Dawood).
The borrower is responsible for the expenses incurred in returning the loaned item.
Renting out: As the borrower you are not allowed to rent out what is borrowed (material things) except by agreement and consent of the lender or by being certain that he will not disapprove of it. Allah says:
"O you who believe! Fulfill your obligations .;" (Q5[Maida]1)
Kindness: A Muslim should be merciful and kind to his believing brother regarding his debt. Allaah says:
"Muhammad is the messenger of AIlaah. And those with him (the believers) are severe against disbelievers, and merciful among themselves ..." (Q48[Fat'h]:28).
If you lend something for an agreed fixed term, it is recommended that you seek not its return until after the fixed term has expired.
ENTRUSTMENT
The entrustment refers to something that is left behind, such as money or other things, with someone who will keep it and return it to the owner whenever he requests it. The entrustment is a kind of trust (a pledge) which you as a Muslim should discharge and render back. Allaah says:
"...Let the one who is entrusted, discharge his trust (faithfully)...... (Q2[Baqarah}:283)
and
"Verily, AIlaah commands that you should render back rust to these whom they are due…. " (Q4[Nisa']:58).
The rule of the trust varies in different situations. The acceptance of the trust from a believing servant may be obligatory upon his Muslim brethren, when he is forced to have someone store his money, and there is no one else available to keep it other than that person. However, receiving the trust is disliked for you, if you fear betraying the trust. Indeed betraying the trust is a sign of hypocrisy. Abu Huraira (RA) related: 'Allaah's Messenger (salallahu alayhi wa sallam) said:
"The signs of a hypocrite are three: Whenever he speaks, he tells a lie; Whenever he promises, he always. breaks it (his promise), if you trust him, he proves to be dishonest. (If you keep something as a trust with him, he will not return it.)" (Bukhari).
Regulations
The depositor as well as the trustee should be those who are responsible and mature. (Le sane in mind, legally responsible). Thus a child or an insane may not entrust someone with something or be entrusted. The depositor is permitted to request the return of his item whenever he desires and the trustee may Similarly return it whenever he wishes.
Deriving benefit: The entrusted individual or group may not derive benefit by usage of the item placed in their care except by agreement or the permission and approval of the depositor. As for the entrusted properties of the orphans, deriving benefits may be permissible. If the guardian is poor, he can take from the property of the orphan, what is just and reasonable according to his work and the time he spends on managing it. Abdullah bin 'Amr bin AI-As (RA) narrated: ' A man came to the Prophet (salallahu alayhi wa sallam) and said: ' I am poor, I have nothing (with me), and I have an orphan.' He (salallahu alayhi wa sallam) said:
'use the property of your orphan without spending it lavishly, hurrying and taking it as your own property." (Abu Dawood).
The rich trustee may not take any wage from the property of the orphan. Allaah says:
"And whoever amongst the guardian is rich, he should take no wages, but if he is poor, let him have for himself what is just and reasonable (according to his labour} ... "(Q4{Nisa']: 6).
However he can trade to improve the wealth of the orphan. Allaah say:
"And come not near to the orphan's property. except to improve it..." (Q6{An'aam]:152)
APPROPRIATION
Appropriation is seizing or confiscating someone's property by force without any right.
Its ruling
Appropriating another person's wealth is forbidden. In another term, this is usurpation. Allaah says:
"And eat up not one another's property unjustly ••• " (Q2[Baqarah}:188).
The Prophet (salallahu alayhi wa sallam) said:
"... Verily your blood and your wealth are forbidden (sacred) to all of you ... "(Bukhari).
A small amount
Usurping the rights of any individual no matter how small will earn you the wrath of Allaah. The Prophet (salallahu alayhi wa sallam) said:
"Whoever wrongfully takes a piece of land, the size of a hand span, his neck will be bridled by the seven earths on the day of Resurrection. "(Bukhari).
Usurping the rights of a Muslim even it be a stick is worse. Anas (RA) related: "The Prophet (salallahu alayhi wa sallam) said:
"It is not permissible for a man to take the stick of his brother (Muslim)
and in Ibn Hibban there is the additional words, "without him being pleased with it. And Abu Hurairah (RA) related: 'The Prophet (salallahu alayhi wa sallam) said;
"... AII things of a Muslim are inviolable for his brother in faith; his blood, his wealth and his honour." (Muslim)
Beware!: Appropriating a Muslim or any individual's wealth without right is oppression and oppressing him is dhulm (transgression and injustice). Abu Dharr (RA) reported: 'Allaah's Messenger (salallahu alayhi wa sallam) said: "Allaah says;
"0 My servants I have indeed prohibited injustice upon Myself and made it prohibited among you, so do not oppress one another." (Muslim)
Oppression is a great sin deserving Allaah's wrath and His punishment in this life and in the hereafter. Ibn 'Umar (RA) related: 'The Messenger of Allaah (salallahu alayhi wa sallam) said:
"Avoid-oppression, because oppression will result in deep darkness on the day of Resurrection.' (Muslim).