The Torah’s Rules on Lending with Interest: What Every Jew Should Know

Many people today take interest-based loans for granted. Banks charge it, businesses factor it in, and we hardly think twice. But in Torah law, the rules around lending and borrowing are much stricter, especially between Jews. Charging or paying interest (ribbit) is a serious transgression, so much so that the Torah warns it can damage a person’s livelihood and destroy his spiritual standing.

This article offers a straightforward introduction to the halachot (laws) of ribbit, based on the rulings of contemporary halachic authorities. Whether you’re starting out on your Torah journey or looking to refine your observance, this is a sensitive and important topic to learn.

1. Is It Ever Permissible to Lend with Interest?

No. Lending money to another Jew with interest is strictly forbidden by the Torah. And it’s not just the lender who violates the law. The borrower, guarantor, witnesses, and even someone who just facilitates the loan, all share in the prohibition.

The Torah views ribbit as a betrayal of Jewish values. It’s compared to denying the Exodus from Egypt and even forfeiting one’s share in the World to Come. That’s how seriously it’s taken.

However, if someone who once charged interest later does teshuvah and returns the extra money, they correct the wrong and clear themselves of the prohibition.

2. What If Both Sides Agree to the Interest?

Even if the borrower agrees to pay interest, and even if he offers it willingly, it’s still forbidden. This includes cases where someone is in financial need and asks for a loan with interest to get by. But the prohibition applies equally whether the borrower is wealthy or poor.

3. What Sin Does the Borrower Commit?

Both the lender and borrower violate the Torah commandment “Do not place a stumbling block before the blind” (Vayikra 19:14), because each one enables the other to sin. Even if the borrower could have gotten the loan elsewhere, the lender still bears responsibility.

If the borrower had no other option except borrowing from a non-Jew, the lender would not be guilty of that specific Torah prohibition, but would still be violating a Rabbinic mitzvah. Helping someone transgress, even indirectly, is forbidden.

4. Must I Lend Money if I Think the Person Won’t Repay?

The Torah commands us to lend to a fellow Jew in need, especially someone who is poor: “If you lend money to My people… to the poor among you” (Shemot 22:24). If you have the means and someone genuinely needs help, you’re obligated to assist.

However, if you’re concerned that the borrower may not repay the loan, you’re allowed to ask for collateral. If the borrower refuses to provide it, and you reasonably fear you’ll lose the money, you’re not required to lend.

5. Can I Give a Gift to Encourage a Loan?

If you need a loan, you may not send a gift to the potential lender beforehand in the hopes that it will encourage them to lend. This is considered “advance interest” (ribbit mukdemet).

Similarly, it’s forbidden to say, “Lend to me today, and I’ll lend to you tomorrow,” as this arrangement also qualifies as a form of interest.

6. Can I Borrow Produce and Repay the Same Amount Later?

Let’s say you borrow a few zucchini or half a cup of sugar from a neighbor. You should do your best to return the precise amount and type you borrowed, although minor discrepancies are not considered critical as people are forgiving of small amounts.

This also means that if you lend your neighbor top-quality confectioner’s chocolate, she may not return just a regular supermarket brand. 

When it comes to larger amounts of produce, however, one has to be more cautious. The Talmudic Sages noted that if commodity prices rise or drop before the loan is returned, interest will effectively be charged even if that was not the intention. To avoid this, the lender can tell the borrower, “I’m giving you wheat worth $100 now, and you’ll return wheat worth $100 later.”

Value-Added Loans

The mitzvah of lending without interest reflects a deeper value in Torah life: we don’t exploit people when they’re vulnerable. Instead, we help them get back on their feet.

Even in a world where charging interest is the norm, Torah law hold us to a higher standard, one rooted in compassion, trust in Hashem, and a shared sense of responsibility. Learning and keeping these laws protects not only your financial dealings, but your soul as well.