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Q&A from the Bais HaVaad Halacha Hotline

Buy Now, Ribbis Later?

January 30, 2025

My business offers free financing for twelve months on orders over $1,000. A customer suggested to me that there may be a ribbis problem with this offer. Is he correct?

A Any benefit that a lender receives from a borrower in exchange for a loan is ribbis (Y.D. 160:7). Your arrangement might constitute ribbis because by stipulating that credit is only offered for large purchases, you essentially require the borrower—your customer—to patronize your business more in exchange for credit.

The Shulchan Aruch (Y.D. ibid. 23) discusses a similar arrangement, where a loan is given on the condition that the borrower hire the lender for certain work. The mechaber forbids this for the same reason: The lender benefits from being patronized by the borrower. The Taz (ibid. 22) argues that hiring the lender is not considered a benefit, as the lender is receiving fair value for his work, not an extra benefit. But the Shulchan Aruch’s view is accepted as halacha (Bris Yehuda 11:24).

There is a debate among poskim whether your case is comparable to that one. Some hold that offering credit for a large purchase is not ribbis, arguing that it is only ribbis when the merchant stipulates that future purchases must be made at his store. In your case, the credit is offered solely to ease the buyer’s payment burden on an expensive purchase (Mishnas Ribbis 4 fn. 45, citing R’ Nissim Karelitz).

Others are stringent (ibid., citing Rav Elyashiv). They argue that even the Taz would agree that your offer is forbidden, because the borrower is compelled to make a purchase in order to receive credit, whereas in the Taz’s case, the borrower is only obliged to hire the lender if the need for his services arises.

In practice, it is advisable to be stringent, because the solution is relatively straightforward: The credit agreement should include a clause stating that it is structured as a heter iska. Or, if the transaction is done online, your website should say that the financing follows the heter iska structure.

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