What does the Bible say
about loans and charging interest?
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Question: What does the Bible teach about loans and charging INTEREST? Does it matter if a loan is for personal or business use? Is it WRONG to charge family, friends or fellow church members loan interest?
Answer: One quote comes immediately to my mind in regard to loans, charging interest and other financial dealings with friends. It is that before we lend money to a friend we need to decide which of the two we need the most, because we are sure to end up with one or the other - but not both! I do not know who said this quote (which is not from the Bible) but it is certainly true. Many good friendships have been destroyed by a few dollars loaned but not repaid.
Thousands of years ago God made provision for lending money. He told ancient Israel that at the end of every seventh year they were to cancel ALL debts of those who owed them any money (Deuteronomy 15:1).
In other words, at the end of every seventh year (beginning when the tribes of Israel entered the land promised by God) every Israelite who lent money to another Israelite was to consider the debt paid in full. On the other hand, if the money was loaned to someone outside the tribes of Israel there was no command for the creditor to release the debt (verse 3).
But there's more. If a fellow Israelite wanted to borrow money DURING the seventh year, the creditor was not to say, "Hey, it's the year of release. I could lose everything, so come back next year" (verses 9 - 10 paraphrased).
In the 21st century we do not know which year would be the year of release, and I do not have a suggestion of what you could use as a starting date. But it's obvious, from the scriptures, we're to lend to our brothers as we are able.
Now comes the hitch. God commands that we are not to charge our brethren a single penny in interest on a loan (Exodus 22:25; Deuteronomy 23:19). Again, however, if the loan is to someone outside the brotherhood, interest may be charged (see Deuteronomy 23:19 - 20).