Fatwa ID: 06895

Answered by: Alimah Zakiratul Hoque

Question:

For a company that lends money, would it be permissible to charge a fee for its services instead of regular interest?

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

Answer:

You cannot charge a fee for a loan because a condition for lending money is that it does not benefit the lender and he doesn’t earn anything from it (Badai Al Sanai, Vol 10, Pg 656). However, there is a principle that states that the costs and losses that occur from something will be upon the one who has derived benefit from it (Qawaaid Fiqhiyyah, Pg 96). Therefore, it would be permissible to charge a fee for processing the loan (to cover the administrative costs, etc). This is different from charging money in return for the debt itself.

أما الذي يرجع إلي نفس القرض : لا يكون فيه جر منفعة فإن كان لم يجز

الغرم بالغنم … اي أن التكاليف و الخسارة التى تحصل من الشيء تكون على من يستفيد منه شرعا

Only Allah knows best.

Written by Alimah Zakiratul Hoque

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham