The Torah's Laws on Interest: Understanding Ribit

Many people think the prohibition of ribit (interest) in Jewish law applies only to the lender who charges it. In fact, the Torah places responsibility on everyone involved in the transaction—including the borrower who agrees to pay the interest, and even extending to the lawyer who certifies the conditions.

Beyond the general commandment of “Lifnei iveir lo titein michshol” (“Do not place a stumbling block before the blind”), there’s a special halachic prohibition of ribit that applies to nearly everyone who takes part in such deals.

Torah-Prohibited Interest vs. Rabbinic Interest

Jewish law recognizes two levels of prohibition when it comes to ribit:

• Torah-Prohibited Interest: This is mainly interest that is clearly agreed upon and fixed in advance—such as lending someone $1,000 and demanding $1,100 in repayment which is the classic, direct violation the Torah forbids outright.

• Rabbinic Interest: Aside from the types of ribit the Torah outlines, the Sages prohibited various kinds of agreements and practices that border on ribit or could lead to misunderstandings and violations of the Torah prohibition. Examples include offering someone a gift in the hope that they will extend a loan; inflating prices for paying by installment; offering early-bird special discounted prices.

Key point: Both forms of ribit, Torah-level and Rabbinic, are forbidden. All parties involved—including lender, borrower, guarantor, witnesses, and scribes—must avoid ribit. While there are permitted ways in which to, for example, give special offers to clients without transgressing the laws of ribit, they are not always intuitive and learning the laws is essential!

Heter Iska

A heter iska is a partnership clause which forms a collaborative relationship between lender and borrower. When it is executed according to Torah law, it can enable a situation in which one party loans another money and repays more. When it is not executed properly, it can lead to severe violations of Torah law; therefore, one must always proceed only with rabbinic guidance.

The Lender and the Borrower

• A lender who charges interest violates six separate Torah prohibitions.

• A borrower who pays interest violates three separate prohibitions.

• Even when the interest involved is Rabbinic in nature, both lender and borrower are still forbidden to participate. 

Example:
Imagine someone lends a friend $500 on the condition they pay back $550 in three months. This is straightforward Torah-prohibited ribit. Both lender and borrower are fully responsible for avoiding such a deal.

Guarantors

A guarantor on a loan that involves interest also violates the prohibition of ribit—even if the loan would happen without them. Anyone asked to guarantee a loan should check carefully to make sure there is no interest involved, including at the Rabbinic level.

Example:
A person signs as guarantor for a friend’s loan with a bank, not realizing the repayment terms include interest. That guarantor becomes part of the forbidden transaction under Jewish law.

Witnesses

Witnesses who sign loan or sale documents that involve interest also violate the prohibition, even if the deal would go through without them.

Example:
Someone is asked to witness the signing of a contract according to which payment in installments will cost a total greater than a one-time payment. This can involve ribit, so they need to check the terms before signing.

Lawyers and Notaries

A lawyer or notary who certifies or approves a transaction, verifies signatures, or confirms a borrower’s acknowledgment of debt is considered like a witness in halachah.

They are therefore forbidden to approve or certify any deal that includes ribit.

Example:
A notary might be asked to witness a mortgage document with interest terms. Even though it’s routine, Torah law would prohibit participating if the loan lacks a valid heter iska.

Contract Writers and Office Staff

Anyone who writes or prepares contracts for loans or sales that include interest shares responsibility—even if the deal would go forward without their participation.

Example:
A secretary typing up a loan agreement with interest terms isn’t excused just because they’re “only” typing—they’re helping make the forbidden transaction happen.

Brokers and Other Helpers

Anyone who brokers a deal involving interest—introducing lender and borrower—or even assists one side, is also violating the prohibition.

Example:
A real estate agent who arranges a property sale where the buyer must pay in installments at a higher price than for cash—without a heter iska—is helping enable ribit.

Rental contracts that include penalties for late payment must also be carefully crafted in order not to transgress the laws governing ribit.

Advertising Agencies

Advertising employees are also responsible. It’s forbidden to create ads for deals that involve ribit.

Examples:

• Preparing ads for products priced higher in installments than for cash without a valid heter iska.

• Marketing a bank or investment company that pays or charges interest without a heter iska.

• Advertising for construction companies that offer interest-like payment deals without halachic approval.

• Advertising an early-bird special for an event without rabbinic approval for the type of offer being made.

Store Employees and Sales Agents

Store workers, salespeople, or agents selling products with payment plans need to confirm the terms don’t involve interest.

Example:
A store clerk can’t just say, “I’m not the owner; it's not my business.” If they’re helping to conclude the sale with interest-bearing terms, they’re part of the transaction and share the halachic responsibility.

A Final Thought

Ribit isn’t just a problem for lenders. Halachah treats the entire community as responsible for keeping business fair and ethical. Everyone involved—from borrower to broker to lawyer to advertiser—shares the mitzvah of avoiding interest and building trust in financial dealings.