Avoiding interest when paying off a loan
Q: I would like to perform hajj in the near future so I need to pay off two loans. I have student loans from over a decade ago that I would like to pay off in full. However, I don’t want to pay the interest that has accumulated on these loans. If I can settle to pay just the amount of the original loan, will that be permissible? Also, I have an outstanding loan from a certain company. If the company agrees to let me pay just a percentage to have the entire loan forgiven, is that permissible?
A:
1. Yes. The extra amount over and above the loan is riba (interest). Try your best to save yourself from the curse of riba.
2. If they assist you and waive off a portion of the loan that you are owing them, it will be permissible.
And Allah Ta'ala (الله تعالى) knows best.
وإذا أقرض الرجل الرجل الدراهم ثم صالحه منها على أقل من وزنها فهو جائز لأنه قبض البعض وأبرأه عن البعض وكل واحد منهما صحيح في الكل فكذلك في البعض (المبسوط للسرخسي 14/38)
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