Considering Riba as giving fees for using other people’s money
19-10-2010 | IslamWeb
Question:
AsalamoAlikum One of my friends asked me a question. He said that what is the difference between giving rent(fixed) on a property(e.g. Home) which is halal and giving a charge on using the money. In other words he was trying to justify giving interest on loans acquired from others. He meant that just like you pay rent to use someone's home(asset) than why cannot you pay a charge(call it interest-rent) on money(asset) acquired from others. kindly help me how to respond to this question. Jazakllah
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His slave and Messenger.
When Allaah forbade Riba (interest and/or usury), the disbelievers said ‘trade is just like Riba’ then Allaah responded to them by saying that He has permitted trade and has forbidden Riba for a wisdom that He knows and for a benefit that He estimates, even if they do not know it. It is Allaah Who knows what is beneficial to people and what is harmful to them, and the wisdom may be apparent to us and it may be that our limited minds are unable to realize it.
Among the benefits of forbidding Riba is that it necessitates taking the money of a person without any compensation because a person who sells one Dirham for two Dirhams for cash or with a deferred payment, gets one Dirham in surplus without any compensation, and no doubt a person’s money is necessary for him to satisfy his basic needs and so it is of great sanctity in Islam, therefore, taking his money without compensation is forbidden.
As regards the statement that the interest in a loan in return for the benefit of the debtor (who borrowed the loan) is like the benefit of a tenant who benefits from a rented house for example and paying a rent in return for that, and thus the surplus money above the loan becomes the right of the person who takes the Riba, and it is not consuming money unjustly, then the answer to this is that the benefit of the house is an actual thing existent in the house, which is a property of its owner, and since the house is his property, then he deserves a compensation from whoever benefits from it, and the latter (tenant) does not bear any liability towards to the house unless there is transgression on his part, and if there is any damage in the house without transgression or negligence on his (the tenant's) part, then it is the landlord alone who bears the damage. Whereas (in case of Riba) the debtor guarantees the capital money of the loan plus the interest while the creditor does not guarantee anything, which means that he is always the gainer. This means that the matter is not paying a charge on using other people’s money, but it is benefitting from the creditor’s money through borrowing in return for guaranteeing it and being liable for it. Therefore, there is a big difference between the two.
Shaykh Al-Qaradhaawi says: “The wisdom (for prohibiting Riba) is that wealth does not create wealth by itself and money does not create money by itself; rather, it is increased by work and effort, and Islam does not prohibit people from owning money and making it grow as long as it is taken from its lawful sources and it is spent in lawful fields." Moreover, Islam did not say what the Injeel (i.e. Gospel) says: “It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.”; rather, Islam says: “It is very good that a righteous man has righteous (lawful) money.” [Ahmad and Al-Haakim]. Of course, the righteous money is the money that is earned from lawful sources and is invested in a lawful manner, i.e. with legitimate and beneficial work, either by itself or through partnership. It is for this reason that Islam permitted the cooperation between capital money and work for the benefit of both parties and for the benefit of the society as well. Indeed, there are other pieces of wisdom behind prohibiting Riba even if our minds do not realize them, however, it is enough for us that Allaah has forbidden Riba. Also, Allaah Says (what means): {Does He who created not know, while He is the Subtle, the Acquainted?}[Quran 67:14]
Allaah Knows best.