Question:
Hi
I am the Menahel of a mosed. We are looking to take out an interest free loan from another frum yid. The loan will be for 3 years with repayments on 1/6th of the loan being made every 6 months. The lender is looking for some sort of protection to ensure that he gets his money back on time.
Would it be mutar for us to offer to pay a fine/fee if we are late in paying back any of the installments? Or would we be allowed to pay a management fee if we are late in paying?
Do you perhaps have another way that we can manage this al pi din?
Thank you!
Answer:
Hello,
The only idea I can think of, is to make a heter iska with the person, which will be giving him a partnership and a certain amount of liability, in the mosed. Therefore, any profits coming to the mosed would be partially his, and as a partner of the mosed, his profits are let’s say 5% of any monies coming into the mosed. However, the heter iska can also stipulate that if however, the money given for the investment will be returned according to the pre-agreed schedule, that the partner is forgoing his profits in the partnership. This way you will be interested in paying the loan back on time, and if you don’t you will have to pay him his 5%.
Offering to pay a one-time fine, is not going to work here, because the heter to charge a one-time fine only helps for sales, etc. but not for cash loans. A “management fee”, would apply even if the money paid on time, and since it is only if the money is late, it seems to just be a term being used to rename the ribbis, and call it something else. (A heter iska and its terms are binding, and it does give the lender a certain amount of liability).
Best wishes
