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Charging Interest: Loans or Borrowed Items
Prohibitions of charging interest (ribit) apply only to loans of money or a commodity (halva'a), not to borrowed items (she'eila):
1. Loan/Halva'a
You do not get back the exact item you loaned but, rather, some equivalent of the original, such as money. The borrower may not give back more than he/she borrowed and the recipient may not accept more. Even saying “thanks” is considered to be a form of interest.
2. Borrowed Items/She'eila
The original item is returned to the loaner (for example, borrowing a car), and there is no prohibition of paying more than what was originally received.
1. Loan/Halva'a
You do not get back the exact item you loaned but, rather, some equivalent of the original, such as money. The borrower may not give back more than he/she borrowed and the recipient may not accept more. Even saying “thanks” is considered to be a form of interest.
2. Borrowed Items/She'eila
The original item is returned to the loaner (for example, borrowing a car), and there is no prohibition of paying more than what was originally received.
General Law on Heter Iska
A Jew is not permitted to charge interest (ribit) for a loan made to another Jew. A heter iska should be used in any case where a loan has been made between Jews if more money will be paid back than what was received.
Note In some cases, if you prepay for a purchase and thereby get a discount, it might be considered as interest paid on a loan, and you would need a heter iska.