5.6.4 Loans and Debts

Understanding Loans and Debts in Islam

Loans and debts touch people’s daily lives, especially in times of need. Islam does not forbid borrowing or lending money, but it surrounds these dealings with clear guidance, spiritual caution, and moral responsibility. This chapter focuses on what is unique to loans and debts, assuming that lawful earnings and the prohibition of ribā are explained elsewhere.

The Basic Principle of Loans (Qard)

In Islamic law, a loan is usually called qard. It means giving someone money or something measurable, with the condition that the borrower will return its equivalent, not more. The original rule is that helping others through loans is an act of worship and charity when done correctly and without interest.

Allah praises those who lend for His sake using the expression “a goodly loan,” which shows His great generosity to the giver.

“Who is it that will lend Allah a goodly loan so that He may multiply it for him many times over? And it is Allah who withholds and grants abundance, and to Him you will be returned.”
(Qur’an 2:245)

The Prophet ﷺ described helping others financially as a way to gain Allah’s help.

“Whoever relieves a believer of one of the hardships of this world, Allah will relieve him of one of the hardships of the Day of Resurrection... And whoever helps his brother, Allah will help him...”
(Ṣaḥīḥ Muslim)

A loan in Islam is meant to be a form of support, not a way to profit from someone’s need. Any extra benefit that is made a condition of the loan belongs to the topic of interest, so it is treated separately. What matters here is that the normal purpose of qard is kindness, not business gain.

The Moral Weight of Being in Debt

Islam views debt as a serious matter that affects a person’s heart, worship, and even their state in the hereafter. Borrowing is allowed, but it is not encouraged without need. The Prophet ﷺ frequently sought Allah’s protection from the burden of debt.

“O Allah, I seek refuge in You from sin and heavy debt.”
They said: “O Messenger of Allah, how often you seek refuge from heavy debt!” He said: “When a man falls into debt, he speaks and tells lies, and he makes a promise and breaks it.”
(Ṣaḥīḥ al-Bukhārī)

This hadith shows that debt can drag a person into sin, such as lying and breaking promises. Because of this risk, a Muslim should avoid unnecessary borrowing, spend with moderation, and plan financially with contentment and trust in Allah.

The Intention of the Borrower

The inner intention of the borrower has a major effect on how Allah deals with him, even if the outcome in this world is the same. Two people may both die while owing money, yet their standing with Allah can be very different.

The Prophet ﷺ said:

“Whoever takes people’s wealth, intending to repay it, Allah will repay it on his behalf, and whoever takes it intending to destroy it, Allah will destroy him.”
(Ṣaḥīḥ al-Bukhārī)

This hadith shows that the believer must be honest with himself. If his intention is sincere repayment, Allah supports him and eases his affairs. If he plans from the beginning to neglect, delay, or run away from payment, this becomes a grave injustice and a cause for divine anger.

Obligation to Repay Debts

In Islam, repaying debts is a strict obligation. Debts are not simply financial matters, they are legal and moral trusts that will be asked about on the Day of Judgment. The Prophet ﷺ gave very strong warnings about meeting Allah while owing people their rights.

“The soul of the believer is held back by his debt until it is paid off on his behalf.”
(Reported by Aḥmad and at-Tirmidhī, graded ḥasan)

This means that even a righteous person can have his full reward delayed because of unpaid debts. The seriousness is so great that the Prophet ﷺ used to hesitate to lead the funeral prayer over someone who had outstanding debts, until their repayment was guaranteed.

In one narration, a man died owing two dinars. The Prophet ﷺ asked if he left anything to pay off his debt. When they said no, he said:

“Pray over your companion.”
(Ṣaḥīḥ Muslim)

Later, when someone took responsibility to pay, he led the prayer. This was to teach the community the gravity of unpaid debts, not to reject the deceased as a Muslim.

From all this, it becomes clear that paying back what one owes is not optional or secondary. It is a binding duty.

Writing and Witnessing Debts

When a loan is taken, especially if it is delayed over time, Islam encourages recording it clearly. This protects the rights of both parties and prevents disputes, suspicions, and broken relationships. The longest verse in the Qur’an speaks about writing down debts:

“O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write between you in justice. Let no scribe refuse to write as Allah has taught him. So let him write, and let the one who has the obligation dictate. And let him fear Allah, his Lord, and not leave anything out of it... And bring to witness two witnesses from among your men...”
(Qur’an 2:282)

This verse lays out many principles that apply to loans and deferred payments. The main ideas that are unique to debts include:

The amount and term of the loan should be fixed and known, not vague or hidden.

The one who owes the money should acknowledge it clearly and honestly.

Writing the agreement and having witnesses is an act of justice and protection, not a sign of mistrust.

Those who can write contracts or witness them should help others sincerely.

Even though Muslims are encouraged to trust one another, Islam teaches that clarity and documentation are better than leaving matters to memory and assumption, especially when money is involved.

The Sin of Delaying Payment

If a person has the ability to pay back his debt and still delays it, this becomes a clear oppression. It is not only a bad habit or impoliteness, but a type of wrongdoing mentioned in prophetic teachings.

The Prophet ﷺ said: “Delaying payment by a rich person is injustice.”
(Ṣaḥīḥ al-Bukhārī and Ṣaḥīḥ Muslim)

So if a borrower has enough money to repay, he must do so immediately. Delaying without the lender’s consent is forbidden. If there is a difficulty, the borrower should explain honestly and seek more time, not hide or cut off communication.

On the other hand, if the borrower is truly in hardship and cannot pay, the Qur’an urges the lender to be patient.

“And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [up your right as] charity, then it is better for you, if you only knew.”
(Qur’an 2:280)

This verse explains that:

The lender must allow more time when the debtor is genuinely unable.

It is an act of great virtue for the lender to reduce or even forgive the debt.

The relationship between borrower and lender should be marked by compassion, honesty, and mutual care, not hostility.

Virtue of Easing and Forgiving Debts

Helping someone in difficulty, especially by easing their debts, is among the greatest good deeds. It joins financial help with mercy and empathy. The Prophet ﷺ told stories of people whom Allah forgave because they were lenient in their money matters.

“A man used to give loans to the people, and he would say to his servant: ‘When you come to one in difficulty, forgive him, that Allah may forgive us.’ So Allah forgave him.”
(Ṣaḥīḥ al-Bukhārī and Ṣaḥīḥ Muslim)

In another narration:

“Whoever would be pleased that Allah save him from the distress of the Day of Resurrection, let him give more time to one who is in difficulty, or reduce the debt.”
(Ṣaḥīḥ Muslim)

These narrations show that a lender should not be harsh, especially with those who are struggling. While he has a right to his money, Islam calls him to a higher character, where he keeps his rights but adds kindness and flexibility, or even decides to give up some or all of the debt for Allah’s sake.

Debts in the Will and After Death

Debts remain binding on a person even after death. One of the first rights that must be taken from the deceased’s estate is the repayment of debts. The order of distribution in Islam is that funeral expenses, then debts, then any valid wills, and finally inheritance to the heirs are carried out. The Prophet ﷺ said:

“The soul of the believer is held back by his debt until it is paid off on his behalf.”
(Reported by Aḥmad and others)

For this reason, a Muslim who has debts should not leave this world without recording them clearly. He should inform his family, write them down, and if possible, arrange payment. This is part of being honest with Allah and with people.

It is also from the goodness of relatives and fellow Muslims to help pay the debts of the deceased, especially if he was known for goodness and sincerely tried to pay during his life. The Prophet ﷺ himself took responsibility for some debts of those who had nothing.

Asking for Loans and Self‑Respect

While it is lawful to ask for a loan, Islam encourages a believer to preserve his dignity and avoid asking people unless necessary. The Prophet ﷺ praised those who try to remain independent.

“The upper hand is better than the lower hand. The upper hand is the one that gives, and the lower hand is the one that takes.”
(Ṣaḥīḥ al-Bukhārī and Ṣaḥīḥ Muslim)

He also promised special care from Allah for those who do not beg or constantly ask others.

“Whoever seeks to be chaste, Allah will make him chaste. Whoever seeks independence, Allah will make him independent. And whoever is patient, Allah will give him patience...”
(Ṣaḥīḥ al-Bukhārī and Ṣaḥīḥ Muslim)

So a Muslim should be balanced. He does not feel proud to the point where he refuses real help when he needs it, but he also does not make taking loans or asking others for money a habit or lifestyle. He tries first to reduce expenses, earn lawfully, and trust Allah, and only then borrows when there is a good reason.

Promising Returns beyond the Loan

Sometimes, borrowers feel grateful and want to give something extra when they repay, as a gesture of thanks. If this is not agreed in advance and is done voluntarily, scholars mention that it can be allowed as long as it is clearly a gift and not a condition of the loan. The Prophet ﷺ himself once repaid a loan with something better in quality, without having made it a condition.

“The best of you are those who are best in repaying (their debts).”
(Ṣaḥīḥ Muslim)

This hadith points to good manners in repayment, such as politeness, promptness, and sometimes even returning in a way that shows gratitude. What remains forbidden is to fix any extra payment as a condition of the loan, as that belongs to interest and is treated under the subject of ribā.

Spiritual Protection from the Burden of Debt

Because debt affects a person’s heart and peace, the Prophet ﷺ taught specific supplications to seek protection from it. Among them is the famous duʿā:

“O Allah, I seek refuge in You from worry and grief, from incapacity and laziness, from cowardice and miserliness, from being overcome by debt and overpowered by men.”
(Sunan Abī Dāwūd, authenticated)

This teaches that:

Debt can overpower a person like an enemy if he is not careful.

It belongs to the things from which a believer seeks refuge, like anxiety and weakness.

Combining good planning, lawful income, contentment, and constant supplication is the best shield against harmful debts.

A Muslim should regularly ask Allah to keep him free of humiliating needs, and if he falls into debt, to help him pay it back quickly and honestly.

Summary of the Islamic Attitude to Loans and Debts

In Islam, loans and debts are neither rejected nor taken lightly. They are allowed and sometimes necessary, but they are surrounded by caution, compassion, and accountability.

The lender is encouraged to help, write agreements clearly, and be merciful in collection, especially when the borrower is in hardship.

The borrower is commanded to intend repayment sincerely, avoid unnecessary borrowing, and pay back fully and promptly.

Both sides are reminded that Allah is witness to every contract and every promise, and that debts will not disappear simply because they are forgotten in this world.

When loans and debts are handled with fear of Allah, honesty, and kindness, they become a means of worship, brotherhood, and mutual support, instead of a source of sin, conflict, and regret.