Repaying Loan According to Gold Value

Repaying Loan According to Gold Value

Question:

My mother and her sister co-owned a house and mutually agreed to sell it. The next house that my aunt bought required more money than her share for which she asked my mother for a loan. My mother agreed. Since her son was handling the money, he took the stipulated amount before it came to my mother. The terms of the loan were that it was repayable within 2 years and the amount due would be whatever the gold rate is on the day of repayment. Let me elaborate. For example on day of loan the amount given was £100. It was decided to look up the gold rate on that day on xe.com. The amount loaned as per xe.com on that day was noted to be 10 AUR. After two years when the loan was payable the 10 AUR turned out to be worth £200. What amount is due back to mom? Jzk

Answer:

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

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, when repaying a loan, a person will have to pay the exact amount of what was taken as a loan.[i] For example, if Zaid lends $100 to Umar, then Umar will have to repay exactly $100.

In the enquired situation, the loan was £100. Only £100 will have to be paid to your mother. Any excess will be Riba (interest) and Haram. It is incorrect to demand the price of 10 AUR from your aunt even though it was mutually agreed.

And Allah Ta’āla Knows Best

Hammad Ibn Ismail Jogiat

Student - Darul Iftaa

Cambridge, Ontario, Canada

Checked and Approved by,

Mufti Ebrahim Desai.

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الديون تقضى بأمثالها

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